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Pressing ahead with IR35

Rumours of a last minute delay or u-turn to the IR35 reforms were put to bed with last week’s Budget. 

The absence of any reference to the off-payroll rules in either the Chancellor’s speech or subsequent “Red Book” was confirmation that the changes are going ahead as planned on 6th April 2021.

A couple of technical changes…

Although the mechanics of the IR35 reforms remain unchanged, HMRC has produced a policy paper detailing some technical changes to ensure that the legislation works as intended.

Here are the most important of these:

Thanks largely to the intervention of the FCSA, the error in the 2020 Finance Act (which enacts the new IR35 rules) will be corrected so that umbrella and PAYE workers are not inadvertently caught by IR35.

Instead the legislation will only apply to supplies of workers where – (1) PAYE and NICs are not applied in full and (2) where the worker has any interest in the limited company through which they are engaged.

This last bit effectively extends the scope of IR35, because previously it only applied where there was a shareholding of more than 5% in the company.

A Targeted Anti- Avoidance Rule (TAAR) will target any arrangements where the main purpose is to gain a tax advantage by taking the arrangement outside IR35.

We’re likely to see plenty of crooked arrangements cropping up which claim to circumvent IR35, and this measure means that HMRC will be actively looking to shut them down. The golden rule? Always use FCSA accredited providers.

No denial – time to dial!

We’re here to help you press ahead with your preparations for IR35, and ensure a smooth transition for your business and your contractors.

If you would like to discuss any aspect of IR35 implementation, including assistance talking to clients or contractors and training for your team, please get in touch with us without delay.