HMRC sets out provisional rules on IR35 for private sector

HMRC has published preliminary guidance on how to prepare for changes to the off-payroll working rules from 6 April 2020, even though the consultation on the extension of the rules to the private sector has yet to close for comment

The consultation, which closes on 28 May, is looking at how HMRC can ensure the off-payroll working rules first introduced in the public sector are suitable for the large and diverse sectors in which the new rules will need to be operated.

It asks for views and information on several subjects, including the scope of the reform and impact on non-corporate engagers; information requirements for engagers, fee payers and personal service companies (PSCs); and how status determination disagreements will be addressed.

The consultation also sets out HMRC’s plans to provide education and support for businesses that will be in scope of the changes.

Now HMRC has published guidance a year ahead of the implementation date.

This points out that from April 2020 the rules for engaging individuals through PSCs are changing. The responsibility for determining whether the off-payroll working rules apply will move to the organisation receiving an individual’s services.

Businesses are advised to look at the current workforce (including those engaged through agencies and other intermediaries) to identify those individuals who are supplying their services through PSCs.

 They can use HMRC check employment status for tax tool (CEST) to determine if the off-payroll rules apply for any contracts that will extend beyond April 2020. HMRC suggests businesses start talking to their contractors about whether the off-payroll rules apply to their role, as well as putting processes in place to determine if the off-payroll rules apply to future engagements.

These processes might include determining who in the organisation should make a determination and how payments will be made to contractors within the off-payroll rules.

HMRC guidance, Prepare for changes to the off-payroll working rules (IR35) issued 15 April 2019

Open consultation, Off-payroll working rules from April 2020

Report by Pat Sweet

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