IR35 - changes delayed until 2021
There has been some good news amongst the current difficult coronavirus times.
The Government has announced that its changes to IR35 rules would be delayed for a year until April 2021. What does this mean for clients and for contractors?
- Clients will not be required to make status determination statements
- Clients will be able to engage contractors via personal service companies (PSCs) without worrying whether the contractor is inside or outside of IR35
- Clients will be able to pay SSQ the agreed rate and not worry about whether or how the contractor is being paid or taxed
- Contractors will be able to carry on working via PSCs
- Contractors working via PSCs will continue to be responsible for deciding how to pay themselves and for accounting for their tax
We are sure you will have questions and we will be on hand to do our best to answer them. We don’t know whether the Government will issue any further guidance on this deferral but the chances are that they won’t, given the pressure on them to deal with coronavirus issues. So in the meantime we’ll try to help everyone work things out.
A few questions people might have:
What if a statement determination statement (SDS) has already been issued for a role?
The SDS has no legal status at the moment. The law has not yet been passed to bring them into existence so any that have been issued can be ripped up and ignored.
What if we still don’t want to engage contractors who work via a PSC?
That is your choice but until April 2021 it will make no difference to you; contractors who do not work via a PSC may be looking for higher rates to reflect this.
What if I am a contractor who now wants to work via a PSC as it will be less hassle?
Not a problem at all – you are free to do this.
What will the Revenue’s attitude be to me if I have accepted a role determined to be inside IR35 and have signed with an umbrella company and now want to work via my PSC?
You will need to look at the terms of your contract with your umbrella company to see what notice you need to give them. You will need to talk to SSQ and to your client to discuss whether this change is possible. You should also take advice from your accountant or tax adviser in case there might be adverse implications.
What do we do if we have engaged a contractor on the basis that the role is inside IR35 and they come to us and say they now want to work via a PSC?
Assuming this is not against any internal policy you have, there is no problem for you in agreeing that they can work via a PSC. Their method of payment and declaration of income for tax purposes is not your worry. This is their responsibility.
You will obviously have your own questions about how this will affect you or your business – do feel free to fire them at us and we will get back to you as quickly as we can. You can contact a member of our team at any time.