HMRC have pledged support for individuals and organisations affected by the changes to off-payroll working (IR35) in the private sector, to ensure compliance with the new rules. In a policy paper released last month, HMRC explained that they will be taking a ‘light touch approach’ to penalties and, for the first year, no fines will be issued to those who – unintentionally – fall foul of the changes.
The government have always insisted that they will take a ‘supportive approach’ to IR35. One which ‘helps those who are trying to do the right thing’. With less than a month to go until the new rules come to fruition, companies and contractors across the country will be hoping they make good on those promises.
What’s Changing in April?
Changes to IR35 in the private sector – delayed from April 2020 – stipulate that the responsibility for determining whether IR35 applies to a contract will transfer from the contractor’s PSC, to the client who engages them.
If IR35 does apply, the client, agency, or third party paying the contractor’s PSC will be responsible for making sure employment taxes and NICs are properly accounted for. The new rules only apply to medium and large size businesses. All small, non-public sector organisations are unaffected.
To learn more about IR35 and what’s changing next month, here’s everything you need to know.
What Support Have HMRC Announced?
In the briefing, published on the government’s website, HMRC unveiled a host of new compliance principles, detailing how they will intervene in cases of suspected non-compliance.
The document suggests that those affected “will not have to pay penalties for inaccuracies within the first 12 months”. That’s unless there’s evidence of deliberate non-compliance. And, unless fraud or criminal behaviour is suspected, no information acquired as a result of the changes will be used to open new compliance enquiries into returns for any tax years before the new legislation takes effect. HMRC will:
- Support those trying to comply with the rules
- Help individuals and organisations who meet their responsibilities under IR35
- Help correct any genuine mistakes
- Identify and correct non-compliance with the new rules
- Challenge those who engage in deliberate non-compliance
- Challenge tax avoidance schemes claiming to avoid IR35, or reduce the tax payable
- Use a specialist team to carry out all off-payroll working compliance activity
Furthermore, as part of their initiative to educate and support, the announcement also promised:
- ‘To work with specific sectors to identify any areas of difficulty’
- ‘One-to-one educational discussions with the largest organisations and agencies’
- ‘Webinars providing support to all affected organisations’
After years of protests, delays, and counter proposals, changes to IR35 in the private sector ARE going ahead. So, now is the time for businesses and contractors alike to make sure they’re ready. To find out more about IR35 and how you can prepare, check out our exclusive IR35 Hub.