Updated IR35 Guidance for Contractors
Up to now, a lot of the guidance published around the upcoming IR35 reforms have been focused on businesses who engage contractors (end hirers) and recruitment agencies. Yesterday, the government published a factsheet aimed at contractors themselves, ensuring they are aware of the most important aspects of the legislation.
We asked one of our resident IR35 experts to look at the new guidance and give their thoughts which we’re sharing below:
The factsheet confirms who is affected by the changes and what is changing in April 2020, confirming once again that although you may pay additional income tax and NIC’s come April 2020 if you have not applied IR35 correctly ‘HMRC will not use information resulting from these changes to open a new enquiry into earlier years unless there is reason to suspect fraud or criminal behaviour’.
Whilst the factsheet states that you do not need to act before April, if your contract is likely to extend beyond April 2020, you should engage with your end hirer now to understand how they will manage the changes. This may require rate negotiations or adjustments to contracts and working practices. Remember the work you complete in March will likely be impacted by the reforms if payment will be made post 6th April 2020.
The guidance confirms that the reforms are under review at present however it is very unlikely that there will be any significant changes or delays. It has been confirmed previously and is referenced in the fact sheet that this is a review of the implementation rather than the reforms themselves.
Whilst there is nothing new contained in the document, it is good to see HMRC starting to provide guidance to contractors directly.
Published on: 14 January 2020 - By: First Freelance