The UK Government has published its response to the to review of the changes to the off-payroll working rules, and has said that it will go ahead with the reforms as planned from 6 April 2020.
In January, the Government announced a review of the implementation of the April 2020 changes to address concerns from affected businesses and individuals. While it has now said the changes will go ahead, it has made a number of changes to address concerns, and support the implementation of the reform, including:
- Customers will not have to pay penalties for errors relating to off-payroll in the first year, except in cases of deliberate non-compliance;
- HMRC have confirmed their previous commitment that information resulting from changes to the rules will not be used to open new investigations into Personal Service Companies for tax years prior to 6 April 2020, unless there is a reason to suspect fraud or criminal behaviour;
- The rules will only apply to services carried out from 6 April 2020 onwards;
- The Government will place a legal obligation on clients to respond to a request for information about their size from the agency or worker, and update the legislation to address concerns raised over the rules as they apply to off-shore companies.
- HMRC have published an updated Employment Status Manual as guidance on the reform, and updated guidance for contractors and agency workers on how to identify tax avoidance schemes.
- HMRC will keep a dedicated IR35 project team in place to help with enquiries, and to maintain a communication programme with business affected by the changes.
Commenting, CECA Director of External Affairs Marie-Claude Hemming said: “It is to be welcomed that the Government has listened to businesses’ concerns over what payments the rules will apply to, and has clarified from when these new changes will apply.
“At the same time, we look forward to engaging with both Government and our members to ensure that businesses are aware of the changes, and of the support available to them as they come into force.”