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IR35 changes delayed due to coronavirus (COVID-19)

18 March 2020: changes to the off-payroll working regime will not take effect until April 2021 due to the coronavirus pandemic, HMRC confirms.

HMRC has confirmed to ICAEW’s Tax Faculty that reports on Twitter yesterday evening that the IR35 changes would be deferred by 12 months were accurate.

In light of the coronavirus pandemic, changes due on 6 April 2020 will now be implemented from 6 April 2021, meaning that the existing off-payroll working rules will continue for a further year.

This gives businesses a further year to make the necessary changes.

For those which have already made changes to reflect the new rules, HMRC has said that Status Determination Statements (SDS) will have no standing in law and will not be used as evidence in any enquiry dispute during the coming year.

The legislation implementing changes to off-payroll working is now expected to be published later this year and HMRC will be updating its Employment Status Manual to reflect this as soon as possible.

Existing off-payroll working rules that will remain in force until April 2021:

  • Private sector: Where work is undertaken for a private sector engager, the worker remains responsible for determining the tax status of the contract and ensuring that the IR35 rules are applied to any payments made to their personal services company (PSC) if the work looks more like an employment contract.
  • Public sector: Where work is undertaken for a public authority, the engager, rather than the worker's PSC, is responsible for determining the tax status of the contract, employed or self employed, and if it looks more like employment, must ensure that any payments made to the worker under that contract are paid through a payroll.