Off payroll reforms (IR35) delayed until April 2021

Annoucement from HMRC:

“[Last night 18 March 2020] the Government announced that the reform to the off-payroll working rules that would have applied for people contracting their services to large or medium-sized organisations outside the public sector will be delayed for one year from 6 April 2020 until 6 April 2021.

This is part of additional support for businesses and individuals to deal with the economic impacts of Covid-19. This means that the different rules that exist for inside and outside the public sector will continue to apply until 6 April 2021.

This announcement is a deferral of the introduction of the reforms, not a cancellation. The Government remains committed to introducing this policy to ensure that people working like employees, but through their own limited company, pay broadly the same tax as individuals who are employed directly.”

It is important to remember that the Government are delaying the the new reforms for the private sector, they are not cancelling them and I have no reason to believe that they will be cancelled despite some reports. So, from now until 6 April 2021, all those paid off-payroll in the private sector will be required to continue to self-assess their position under Chapter 8, Part 2, ITEPA 2003 (IR35).

Although the delay is welcome news because of Covid-19, there will be many clients who have already made preparations and status determinations. For those who have made inside IR35 assessments, the client’s liability has been deferred until 6 April 2021 but, it would be prudent to get some advice as to the consequences of these assessments. For example, if the cleint has assessed the PSC as inside IR35, but then continue to pay on invoice as outside IR35 for the next year, both client and contractor need to check their position.

HMRC are likely to be particularly vigilant in enforcing the exisiting Chapter 8 (IR35) rules so, contractors need to be having their contracts reviewed and ensuring that their working practices are congruent with the contract and with them being outside IR35.

Written by:
Rebecca Seeley Harris LLB (Hons) LLM MSc
Employment status & IR35 expert
Re: Legal Consulting Ltd