Commercial Law

Information on HMRC Changes to IR35

March 4, 2020

Private sector businesses have until the 6th April 2020 to get ready to apply changes to any IR35 contracts carried out after 6th April 2020.

The new date is the latest in a series of changes to IR35 rules, which have already been in the public sector since 2017, which will now apply to new contracts or contracts that businesses expect to continue after 6th April 2020. It’s important to remember that the changes will not apply to payments made for work done before 6th April 2020.

Despite this, there are still crucial concerns about the legislation and the risks it poses for private businesses.

IR35 applies where a contractor is considered to be carrying out the same work or similar work to permanent staff already engaged in the business. In these cases, an employer is required to deduct income tax and national insurance contributions as if the contractor is an employee. The legislation clearly has benefits for HMRC, and its tax collection targets, but has also created a grey area of law for enforcement purposes and therefore uncertainty for contractors. There have been plenty of arguments between tax advisers/accountants and HMRC concerning the relationship between an employer and IR35 Contractors.

We can expect the introduction of the rules and their enforcement to continue to produce legal wrangles between contractors (and their employers), continuing disputes with HMRC, and over enforcement of the rules. It also highlights an apparent failure by HMRC to recognise that the workforce has changed and is changing and that the employer/employee straight jacket does not fit all cases merely because it is convenient for HMRC to consider that it should.

If you would like advice on this topic or need to have your existing contract and T’s and C’s reviewed, contact Barry Bond at Jarmans Solicitor on 01795 472291 or email enquiries@jarmans-solicitors.co.uk