Change to off-payroll working rules

The off-payroll working rules are due to be rolled-out to private sector contracts from 6 April 2020, but it seems that neither the Government, HMRC, engagers or the contractors themselves are ready.

This is hardly surprising since the legislation to introduce these rules is still in draft, there are two on-going reviews into how the law will work, and a key aspect of the implementation was changed only last week.

As we explained on 29 August and 7 November 2019, the off-payroll working rules are a fresh application of IR35, with the responsibility for compliance switched 180 degrees to the engaging organisation. Those contractors who work for “small” clients (generally those which don’t require an audit), are not affected.

As originally proposed the off-payroll working rules were to apply to private sector contracts where payment for the services was made on or after 6 April 2020. This would have meant that work performed in February and March 2020 would be drawn into the new regime, as contractors regularly have to wait 30 days or 60 days for their payments.

Fortunately, common sense has prevailed. Now the off-payroll working rules will only apply in the private sector where the service is performed on or after 6 April 2020 and payment for those services is also made on or after that date.

HMRC has published detailed guidance in its Employment Status Manual at ESM 10000 onwards, but all the guidance relating to the rules from April 2020 is marked: “This is a draft and may be subject to change”.

Written by the Tax Advice Network