IR35 changes for the private sector delayed in response to COVID-19. HMRC has delayed the changes to the operation of IR35 for the private sector by 12 months as part of a package of measures to support businesses through the Covid-19 outbreak.
Given current economic uncertainties, it is possible that the implementation may be pushed back even further, although the treasury maintains that “this is a deferral, not a cancellation”.
Contractors and businesses alike will welcome more time to prepare, especially as there has only very recently been clarity on the detailed rules. Equally, IR35 is unlikely to be a priority for HR teams in the coming weeks and months, given the more significant issues they are facing.
For the time being, self-employed individuals engaging clients via personal service companies must continue to consider their IR35 status. The extra year of grace, however, provides such workers with the opportunity to revisit contractual terms and conditions with their clients, if they have not already started to do so, in anticipation of 6 April 2021.
In the meantime, a gulf continues to exist between the tax treatment of contractors servicing the public and private sectors. Clearly, at a time when many public services are desperately trying to secure additional resource, this is far from ideal.
This post was written by Sarah Howarth, a tax specialist at Price Bailey. If you require any questions relating to IR35, please contact Sarah on the form below.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.