{"id":3132,"date":"2019-07-12T13:48:24","date_gmt":"2019-07-12T12:48:24","guid":{"rendered":"http:\/\/liquidfriday.co.uk\/?p=3132"},"modified":"2019-07-12T13:48:24","modified_gmt":"2019-07-12T12:48:24","slug":"few-surprises-as-ir35-draft-legislation-is-published","status":"publish","type":"post","link":"https:\/\/www.liquidfriday.co.uk\/few-surprises-as-ir35-draft-legislation-is-published\/","title":{"rendered":"Few surprises as IR35 draft legislation is published"},"content":{"rendered":"\n<p>Resignation rather than shock would best describe industry reaction to the draft IR35 legislation published by Government this week. <\/p>\n\n\n\n<p>As expected the off payroll rules will be extended to the private sector from April 2020, and while HMRC believes that this gives people and businesses ample time to prepare, that\u2019s not far away, considering the far-reaching impact on the supply chain. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">IR35 draft legislation &#8211; key points<\/h2>\n\n\n\n<p>We\u2019ve read the draft legislation so you don\u2019t have to, and here are the bare bones of it:<\/p>\n\n\n\n<ul><li>IR35 rules for the public sector will be extended to the private sector from April 2020 \u2013 however, there are some significant differences<\/li><\/ul>\n\n\n\n<ul><li>End-clients will be responsible for determining the IR35 status of the PSCs they engage<\/li><\/ul>\n\n\n\n<ul><li>There will be a small business exemption generally inline with Companies Act 2006 definitions &#8211; note that this exemption is the client not the agency<\/li><\/ul>\n\n\n\n<ul><li>Even if the end user does everything right, but its supply chain then fails to pay the IR35 tax and NICs, liability may transfer up to the chain to whoever HMRC think should have paid.  This means it is really important to use a compliant supply chain.<\/li><\/ul>\n\n\n\n<ul><li>A new term \u201cstatus determination statement\u201d has been introduced &#8211; referring to the IR35 decision which must be passed down by the client<\/li><\/ul>\n\n\n\n<ul><li>Anyone in the supply chain who does not do what they should do, or pass down the status determination statement becomes liable for any unpaid tax and NI<\/li><\/ul>\n\n\n\n<ul><li>Clients will have a duty of reasonable care, so a status determination will not count if the client has failed to take reasonable care<\/li><\/ul>\n\n\n\n<ul><li>There will be a statutory client led status disagreement process, and clients must respond to a disputed decision within 45 days, although there is no statutory appeal process<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">PSCs will be better off\u2026 according to HMRC <\/h3>\n\n\n\n<p>The policy note accompanying the draft legislation actually states that there will be savings for PSCs as they will no longer have to do their own determinations or pay accounting fees. <br>\nFurthermore it states that any economic impact will be negligible. <\/p>\n\n\n\n<p>Naturally, the wording of the policy note suits HMRC\u2019s own agenda and this has been met with scorn by many, who know all too well the disruptive impact the off payroll changes had when they were introduced in the public sector. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Beware of non-compliant \u201csolutions\u201d<\/h2>\n\n\n\n<p>One thing we saw in the public sector was that promoters of non-compliant payroll arrangements really ramped up their marketing efforts and many contractors were lured in. <\/p>\n\n\n\n<p>One thing we saw in the public sector was that promoters of non-compliant payroll arrangements really ramped up their marketing efforts and many contractors were lured in. <\/p>\n\n\n\n<p>In a recent article, respected law firm Osborne Clarke described how this exposed agencies and end clients to significant tax risk and even criminal risk under the Criminal Finances Act, enabling legislation, DOTAS (Disclosure Of Tax Avoidance) rules and Intermediaries Legislation.<\/p>\n\n\n\n<p>With confirmation that the changes to the IR35 regime will hit the private sector in April 2020,  these types of arrangements are likely to be on the rise.<\/p>\n\n\n\n<p>With confirmation that the changes to the IR35 regime will hit the private sector in April 2020,  these types of arrangements are likely to be on the rise.<\/p>\n\n\n\n<p>They include:<\/p>\n\n\n\n<ul><li>Contractor loan schemes (including those which claim to avoid the 2019 loan charge)<\/li><\/ul>\n\n\n\n<ul><li>Some types of third party IR35 checking arrangements. If not properly structured these may expose the entire supply chain to risk under the MSC legislation<\/li><\/ul>\n\n\n\n<ul><li>Certain mini-\u201dumbrella\u201d company arrangements<\/li><\/ul>\n\n\n\n<ul><li>Sham statement of work arrangements where the documents don\u2019t accurately reflect what happens in reality. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Getting ready &#8211; and how we can help<\/h2>\n\n\n\n<p>Like it or not, the onus is now on the private sector to prepare for these changes ahead of next April.  <\/p>\n\n\n\n<p>Agencies need to be able to help their clients get up to speed, or risk losing businesses to agencies who can.  Although care needs to be given to ensure that MSC rules do not kick in, especially with some outsourced IR35 checking services.<\/p>\n\n\n\n<p>At Liquid Friday we are on the frontline in helping agencies and their clients prepare for IR35 in the private sector, having done the same for hundreds of recruiters and engagers in the public sector.  <\/p>\n\n\n\n<p>If you need help formulating your April 2020 action plan, email joe.taffurelli@liquidfriday.co.uk  or call us on 02392 883300 and we\u2019ll do all we can to help. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Resignation rather than shock would best describe industry reaction to the draft IR35 legislation published by Government this week. As expected the off payroll rules will be extended to the private sector from April 2020, and while HMRC believes that this gives people and businesses ample time to prepare, that\u2019s not far away, considering the [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":3135,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","inline_featured_image":false,"footnotes":""},"categories":[26,27],"tags":[39],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Few surprises as IR35 draft legislation is published - Liquid Friday<\/title>\n<meta name=\"description\" content=\"Resignation rather than shock as draft legislation confirms that IR35 off payroll changes will be extended to the private sector from April 2020\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.liquidfriday.co.uk\/few-surprises-as-ir35-draft-legislation-is-published\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Few surprises as IR35 draft legislation is published - 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