IR35 Update

Candice Fourie
Sep 25 · 3 min read
Photo by Austin Distel on Unsplash

The subject of IR35 has been receiving a lot of news coverage recently, firstly with the new private sector off-payroll working tax rules coming into force in April 2020, and now with the HMRC letters that have been sent out to GSK contractors.

Off-payroll working (IR35) rules to apply in the private sector from 6 April 2020
We discussed the impending changes to the off-payroll working rules in an email sent out on the 14th of May, but would like to remind of some important points that you should be considering and acting on now, have you not already…

  1. Have you considered whether your end client is large or medium-sized?
  2. Talk to your client/agency and find out what they are intending to do regarding these changes.
  3. Get an independent review of your working conditions as well as your written contract.
  4. Check your employment status using HMRC’s CEST (Check employment status tool) to see whether you are within IR35 for your existing contract for the 2019/20 year? This tool has been widely criticized for its poor phrasing of questions and its lack of questions on fundamental legal principles (in addition, in a recent Tribunal case HMRC themselves tried to argue that a taxpayer could not rely on the decision of the CEST tool!) But this shows that you are being proactive.
  5. If you are within off-payroll working for next year, will you still need your PSC?

The HMRC have indicated 170,000 individuals are affected according to their Tax Information Notice on off-payroll working in the private sector.

Having read two articles from opposing IR35 review specialist and insurance companies this week, it seems they are taking slightly different views to the letters sent by the HMRC concerning services provided to GSK. While the number of contractors who have received this letter has not been confirmed it is believed to be at least 1500.

Although you are not legally required to respond to these letters, it is clear that the HMRC are on a hunting expedition and sticking your head in the sand will not serve you well. Make sure you take note of the deadline for submitting your response too!

If you have received a letter of this kind, or similar, from the HMRC please do let us know.

It would be wise for you to get your contract, as well as the working conditions, reviewed by an IR35 specialist now if you did not do so at the time. This will provide you written evidence from an independent organization which offers a professional opinion on whether you are within IR35 or outside of IR35. Even if HMRC disagrees with that opinion, it is evidence that you have taken all reasonable steps to comply with your obligations.

If you would like to read the articles on this subject (from two companies that we recommend for an IR35 review) please see links below:

No Worries helps freelancers and small businesses with specialist tax advice and accounting services.

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Candice Fourie

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