The government has now published its response to the review into the implementation of changes to the off-payroll working rules (IR35) for the private sector. Following the conclusion of this review, the government has confirmed that the changes will still take effect as planned from 6 April 2020, but there will be a package of measures designed to support the roll-out of the changes. Under the measures:
- businesses will not have to pay a penalty for inaccuracies and errors relating to the off-payroll rules in the first year, except in cases of deliberate non-compliance
- HMRC is confirming its previous commitment that information resulting from the changes will not be used to open new investigations into personal service companies (PSCs) for past tax years, unless there is reason to suspect fraud or criminal behaviour
- the draft legislation will place a new legal obligation on client organisations to respond to a request for information about their size from the worker or agency, i.e. whether or not they are a small business and so exempt from the changes, to make it clearer who is responsible for determining the worker’s tax status
- the draft legislation will be amended to exclude wholly overseas organisations with no UK presence from having to consider the changes (and the current rules will therefore continue to apply where the client is wholly overseas)
- HMRC will increase its communication efforts to support contractors in their understanding of the rules.
In addition, HMRC has published various communication resources on the reforms. These are designed to be widely circulated to help publicise the changes.
A new Finance Bill 2020 is expected to be published on 19 March 2020 to bring the changes into force.