The government’s review of the changes to the off-payroll working rules has now concluded and the government has published its response.
Customers will not have to pay penalties for errors relating to off-payroll in the first year
In January 2020, the government launched a review of the changes to the IR35, to determine if more can be done to ensure a successful implementation of the reform.
The review has now closed and it has been announced that the reform will go ahead on April 6 2020, but the government has published a number of changes to the reform:
- Customers will not have to pay penalties for errors relating to off-payroll in the first year, except in cases of deliberate non-compliance.
- HMRC are confirming their previous commitment that information resulting from changes to the rules will not be used to open new investigations into Personal Service Companies (PSCs) for tax years prior to April 6 2020, unless there is reason to suspect fraud or criminal behaviour.
- In response to feedback from the roundtables that an immediate change would be beneficial, the government has already announced that the rules will only apply to services carried out from 6 April 2020 onwards.
- The government will place a legal obligation on clients to respond to a request for information about their size from the agency or worker, and update the legislation to address concerns raised over the rules as they apply to off-shore companies.
- HMRC has already published detailed guidance on the reform and clarified the position on a range of concerns raised, for example the client- led status disagreement process, including by making explicit the time limits within which a disagreement can be raised. The Employment Status Manual guidance has been further updated in line with other outcomes from this review.
- HMRC has already published a factsheet to support contractors prepare for the changes, and are continuing to step up their communications in the run up to implementation. HMRC are launching further products to support contractors in understanding the changes, including a self-help guide on how to spot tax avoidance schemes.
The government said it will continue to listen to stakeholders, and monitor and evaluate the operation of the rules. HMRC will also commission external research into the impacts of the reform six months after implementation, including on how status assessments are being made.