Commenting on the announcement by the Government yesterday that it is postponing the reform to the off-payroll working rules IR35 from April 2020 to 6 April 2021,1 Michael Steed, Co-chair of Association of Taxation Technicians’ Technical Steering Group, said:
“We very much welcome the Government’s announcement that the introduction of the off-payroll working rules for the private sector will be delayed by one year. This is a pragmatic and sensible decision given the highly uncertain times and unprecedented challenges which both businesses and HMRC face because of COVID-19.
“We had called previously on the Government to delay the introduction of these rules2 on the grounds that businesses have not had time to make adequate preparations. In particular, the lack of final legislation means there remains a real lack of clarity as to how the off-payroll rules will operate in practice in the private sector.
“We hope that this sensible and very welcome announcement will, once the situation with COVID-19 improves, allow HMRC more time to address the concerns of the business community over these rules and extend their educational and support offerings.”
Notes for editors
- Changes to the off-payroll rules which were scheduled to be introduced for the private sector from April 2020. Similar changes were introduced in the public sector in April 2017, and were criticised widely for being rushed. If the rules are implemented in the private sector as proposed in the draft legislation then, from 6 April 2020, responsibility for determining whether an engagement falls within the off-payroll rules will move from the worker’s personal service company (PSC) to the client (the business which requires the worker’s services). The party which pays the PSC - which may be the client, or an agency depending on the commercial arrangements - will then be required to operate PAYE and NICs as appropriate.
- See our press release of 7 January 2020 for more details on why the ATT believed a delay was needed.