changes to IR35 for the private sector
It had been intended that the off-payroll IR35 working rules would change as of the 6 April 2020 but in light of Covid 19 this has now been delayed until 6 April 2012. This has come as a welcome relief to those affected by the changes.
When it does come in to for the change will be relevant to those arrangements where a worker provides services to an end client through a personal service company (PSC) where, if it was not for the PSC, the relationship between worker and end client would be one of employee and employer.
The impact of the change will mean that the responsibility for assessing whether IR35 applies will shift from PSC to the end client if the end client is a medium or large entity; this responsibility already applies to the public sector.
The end user will be responsible for providing the worker with a status determination statement (SDS); this is also a new requirement for the public sector.
For small companies the responsibility remains with the PSC.
A small company will need to satisfy at least two of the following three requirements:
- its annual turnover is not more than £10.2m;
- its balance sheet is not more than £5.1m; or
- number of employees is not more than 50.
HMRC has confirmed that the new rules will only apply to payments for services that are actually provided on or after the 6 April 2020.