As discussed in our previous posts in April 2019 and January 2020, the government intends to apply the IR35/off payroll reforms to the private sector in April 2020. By way of reminder, the IR35 reforms are intended to apply to any individual who, but for the supply of their services through an intermediary, would otherwise be an employee of the end-user client receiving the service. These rules will impact medium and large businesses in their role as the end-user client. From 6 April 2020, these organisations will become responsible for determining the employment status of contractors, regardless of whether they supply their services through a personal service company directly to the end-user or via an agency. The new rules will effectively see a shift in current responsibility on status determination, from the contractor to the end-user client.
By way of update, in early February 2020, HMRC provided some clarification about the new off payroll rules. In order to allow businesses more time to prepare for the changes, it has confirmed that the new regulations will only apply in respect of services provided on or after 6 April 2020, rather than any payments for services made on or after that date. Therefore, if any payments are made post-5 April 2020 for services that were provided pre-6 April 2020, they will not be caught by the changes. This is helpful clarification for end user clients who currently engage individuals via personal service companies – it means that there is an additional period in which businesses have time to prepare for the implementation of the new rules.
The formal publication of the review that has been conducted into the implementation of changes to the off payroll rules is due to conclude in February 2020, and it is hoped that it will bring some additional welcome clarification on the new rules for private sector contractors and end-user clients alike.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2020. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
