The unprecedented circumstances caused by the Coronavirus pandemic have led to the off-payroll reforms to IR35 in the private sector being delayed by 12 months.
The legislation will now be reintroduced in April 2021. We are supportive of this delay given the dire health and economic challenges now facing the United Kingdom, but we are also mindful of the fact that it has been made clear that this is only a delay and not a cancellation outright.
- The changes will happen on 6 April 2021, not 6 April 2020, in the private sector.
- In the public sector, the rules will change to align to the new private sector rules, in April 2021 too.
- Status Determination Statements done to date will have no legal status – these will need to be done on the contracts and working practices in place in April 2021 – effectively ‘done over’.
- HMRC does not intend to pay any attention to SDSs done to date when considering if a contractor is currently inside or outside (though we recommend waiting for some written confirmation of this).
- Official confirmation of the delay was given in parliament on the 17th of March – something in writing should appear online today / tomorrow.
- Agencies and end users in the private sector therefore have no new responsibilities from 6th April 2020, and no new liabilities to consider and should prepare for an April 2021 start – but this time we will have had the final legislation for many months before implementation.
- Contractors who have been told not to use their PSC, or that they are ‘inside’ on the new rules, should speak to their agencies (and possibly end users) to see what the situation is now.
- Contractors using PSCs in the private sector should apply the ‘old IR35’ rules (Chapter 8) for the 20/21 tax year as they do today.
With the delay coming so late in the day, it is likely that many end-clients will have already set in motion new engagement practices that they are now unable or unwilling to restructure in the immediate future.
Needless to say, we at K&B will support agencies and contractors in any way possible through either our Umbrella engagement option or via our accountancy services.
Over the up-coming days we will be making contact with all our contractors to discuss this matter further and determine how best to move forwards.
If you have any queries in the meantime, please do contact us.