IR35 has been in place since 2000 with the rules aimed at “disguised employment.” (See previous blog). Though the Government has sort to rectify this over the years it claims that too many limited company owners are still illegitimately working outside of the rules.
Therefore the “off-payroll” rules are to be applied to the private sector from April 2020, the only exception to this is “small businesses.” The end-client must meet two or more to of the following criteria to be deemed a small business,
- Annual turnover is no more that £10.2 million
- Balance sheet total is no more than £5.1 million
- No more than 50 employees.
It is said that the implementation will net £1.3bn per year to the Treasury by 2023.
The Government published draft legislation in July 2019 with the following new points,
- A “Status Determination Statement” will be required. The end-client needs to confirm the IR35 status of a contract, which needs to be provided to the contractor and the party hiring the contractor (usually the agent). Without this then the end-client will be liable for the collection of income tax and NICs
- If the above is not agreed, then you will need to go through the client-led disagreement process. The end-client needs to review a decision and provide a reasonable response within 45 days. If this does not take place then the client, and not the agent, will be liable for IR35.
It is predicted that most private sector contractors will be impacted with this new legislation as most work for large clients rather than small businesses.
If you should need any help regarding IR35 then get in touch on 0113 286 4486
Sources: itcontracting &Crunch
Photo by Silvia Brazzoduro on Unsplash
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