HMRC have issued a briefing — reform of off-payroll working rules — covering the rules applying to the private sector from 6 April 2020.
Briefly, the off-payroll working rules may apply where a contractor provides services through an intermediary, such as a personal service company (PSC), where in the absence of the intermediary, they would be treated, paid and taxed as an employee. The decision as to whether a contract IS inside of IR35 has always been the responsibility of the worker. From April 2020 it will be the end client (for medium and large-sized companies) that is required to make this determination and where necessary the fee-payer will be responsible for deducting PAYE and NI before paying the worker.
Please see our previous articles on this hot topic. (https://medium.com/noworriesaccounting)
The HMRC reiterated that this is not a new tax, but simply a shifting of responsibility to the end client in determining how the worker should be taxed. They estimate that in the private sector, only 10% of people who should be paying tax under the off-payroll working rules are doing so.
HMRC have confirmed that they will only use information resulting from these changes to open a new enquiry into earlier years if there is reason to suspect fraud or criminal behaviour.
Top tip. Review your engagements now! It would be wise to use an IR35 specialist to get a full review of both your contract and your working conditions.