IR35 and the private sector - HMRC consultation

HMRC is asking for views on extending the changes to IR35 to the private sector.

A consultation paper seeks comments (by 28 May 2019) on the implementation of the reform of the off-payroll working rules (commonly known as IR35) from April 2020.

Broadly, the proposed reforms shift responsibility for determining tax status from the employee to the employer. Those caught in the net will be taxed as employees rather than through their personal service companies. Under the proposals organisations that use off-payroll workers will be required to make stringent checks to determine their employment status and where the responsibility for tax and NICs lies.

The organisation or party that fails to meet its obligations under the IR35 rules will be held liable, but HMRC proposes that liability will transfer through the supply chain where HMRC cannot collect from the party that owes tax or NIC. The consultation also proposes that small organisations with fewer than 50 staff or a turnover of £10.2m will be exempt from the rules.