On November 30th the Chancellor advised that Government would carry out a review of the IR35 private sector reforms which are due to be rolled-out in April 2020. Today Government have confirmed that the review is taking place and defined the scope of the review.
The public has spoken and Boris Johnson has been elected as Prime Minister. Even though the Conservative Party said they would review the IR35 reforms in the private sector, given they were the architects of the legislation we strongly believe that these changes will go ahead as planned however watch this space for further announcements.
Last month we reviewed HMRC’s Check of Employment Status for Tax tool after HMRC refused to accept NHS Digitals status determination outcomes that had been generated by their very own tool. Now with less than 20 weeks to go before the new off-payroll working in the private sector rules are due to come into effect in April 2020, HMRC have finally launched an updated CEST.
HMRC will consider the multiple factors when determining status. Clients should ensure that its processes and documentation support the IR35 status decision it makes (particularly when the decision is “outside IR35”). The following factors are what HMRC will consider when making an individual’s status determination statement (SDS):
The draft legislation was released earlier today and is largely as discussed in the consultation document and very similar to the off-payroll rules in the public sector. However it will be subject to scrutiny and possible change as it makes its way through Parliament to become the Finance Act. There were a number of outstanding questions following the end of the public consultation, all of which we focus on in our response, along with the key points likely to have a material effect on the industry.
Over the past year or so much has been written and said about this HMRC creation and it is destined to figure prominently in the lead up to April 2020 when the off-payroll working in the private sector rules are scheduled to come into effect. Although we don’t know yet what the final format of the tax legislation will look like, we can be pretty confident that CEST in its current or slightly amended form will be at the operational end of it.
We have recently seen a number of letters from HMRC received by contractors working for a well- known end client in the engineering and construction industry. The letters ask the contractor to check their employment status whilst they carried out work for this particular client.
The consultation on “off-payroll working rules from April 2020” was published on 5th March 2019. The proposals are broadly similar to the public sector, however there are some key developments which will apply equally to public sector engagements from April 2020.