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IR35 Update – Finance Bill published
The government had promised an update to the consultation period around IR35 legislation. The draft IR35 regulations were published as part of the Finance Bill 2019-20 on Thursday 11 July and the purpose of this communication is to provide you with the key take away points:
- Confirmation that the new rules will apply in the private sector from April 2020
- The small company exemption is confirmed and the definition is as per the Companies Act 2006, as expected
- The end client in the chain is given fee payer responsibilities until such time as they pass on a ‘status determination statement’ to both the party they contract with and the worker
- The last party in the chain to receive the determination is classified as the fee payer and takes fee payer responsibilities (i.e. making any PAYE deductions)
- For a 'status determination statement' to be valid it has to also include the reasons why the determination was reached, ensuring reasonable care is taken and is seen to be taken in reaching the decision as to whether the assignment is inside or outside of IR35
- There will be a statutory client-led status disagreement process - contractors/PSCs can challenge the determination and clients are given 45 days to respond. The client must either— (a) inform the worker or (as the case may be) the deemed employer that it has considered the representations and has decided that the conclusion is correct, or (b) give to the worker and the deemed employer a new status determination statement which contains a different conclusion and states that the previous status determination statement is withdrawn.
- The 5% allowance is scrapped
The over-arching message is, nothing major has changed from the Government’s proposals in the consultation from May, and the government are pressing ahead with implementing the changes on 6 April 2020. We do not anticipate that any major changes will be made to the Finance Bill and that this will be passed by Parliament in the autumn.
The message from us is, please ensure you have started the process of IR35 compliancy. To help you with this, our IR35 Hub contains a large amount of useful information and resources, including our Impact Assessment Tool, and we would urge you to visit it now.
If you are needing specific support, please contact IR35@gattacaplc.com