IR35 - off-payroll working rules review launched, but reforms still due to come into force on 6 April 2020

IR35 - off-payroll working rules review launched, but reforms still due to come into force on 6 April 2020

On 7 January 2020, the government announced that it was launching a review of the changes to the off-payroll working rules. This follows from the comments made by Sajid Javid, the Chancellor, during the election campaign, indicating that he wanted a review to ensure the proposed changes to IR35 were “right to take forward”. 

The government has now made clear that the review will not be about whether or when to implement the changes, but simply will seek to address concerns about how they will be implemented. The review aims to “determine if any further steps can be taken to ensure the smooth and successful implementation of the reforms”. The review will also assess whether “any additional support is needed to ensure that the self-employed, who are not in scope of the rules, are not impacted”.

There are five mentions in the government announcement of April 2020 as the due date for the new rules to come into force, so it seems sensible to assume that there is unlikely to be a delay in the implementation of the rules.  Businesses should, therefore, continue with preparations for their April 2020 introduction.

The government have said that they aim to conclude the review by mid-February. The review will consist of a series of roundtable discussions with stakeholders representative of those affected by the reform including contractor groups and medium and large-sized businesses.

As part of this review, the government has said it will also carry out further internal analysis, including evaluation of the enhanced Check Employment Status for Tax (CEST) tool.  Readers may recall CEST has been heavily and repeatedly criticised by commentators for failing to address “mutuality of obligation”, a fundamental concept in employment status for tax purposes (see the recent tribunal decision of RALC Consulting v The Commissions for Her Majesty’s Revenue & Customs (TC07474)).  We can also expect continued engagement from HMRC in the coming weeks to help those affected by the changes and their representatives to prepare for implementation.

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