Updated Guidance Note and Information

Anticipated changes to the IR35 rules - These changes have now been postponed until 2021.

H. M. Government (“HMG”) published a draft Bill in July 2019 containing proposals for changes to the IR35 rules (see the May 2019 blog on the subject). HMG intends to bring those changes into effect very shortly (see below) by including them in a new Finance Act.

Accordingly, the Guidance Note on IR35, Employment and Self-employment has been updated and a useful set of checklists has also been added (all of which you can see by clicking here ). The Information Pages have also been updated and can be found here .

These items cover HMG’s proposed IR35 changes on the assumption that the Finance Act will not differ from the draft Bill. However, somewhat late in the day, HMG has, since January, been reviewing its proposals, it is possible that there might be last minute amendments to the Bill, or, as a number of organisations and many self-employed contractors would like to see, a substantial delay in the introduction of these IR35 rule changes. In the context of the recent Cabinet shuffle resulting in the appointment of Rishi Sunak as the new Chancellor, lobbying to persuade HMG to suspend the introduction of the changes has recently been stepped up. If not suspended or delayed by HMG, the new rules will come into effect on 6 April 2020.

In the meantime, HMRC has recently confirmed a slight relaxation in the phasing of the introduction of the new rules so that, in relation to the private sector, the rules will apply only topayments for services delivered from 6 April 2020, not to payments made from that date for any services delivered before 6 April.We will only know the precise position at some time between now and mid/late March 2020 – see below.

How best to prepare for the changes .

As soon as HMG clarifies the precise IR35 rule changes to be made and the date when they will come into effect, the Information Pages and Guidance Note will be revised further if necessary. In the interim, we strongly recommend that if you might be affected by IR35 changes you should assume that they will be as per the IR35 changes outlined in the Guidance Note and Information Pages, and that they will come into effect on 6 April 2020. We also recommend that you now urgently review and make plans for those changes, taking professional HR, tax and legal advice as necessary to ensure that, as far as possible, you are prepared for them.

Tight timetable for implementing the changes

Delays to implementation of the 2019 proposed changeshave arisen due to Brexit, the general election, and the fact that a new Finance Bill can only be passed after the 2020 Budget (on 11 March 2020 but this might be delayed). Only after the Budget do we expect to see a final version of the Finance Bill and then, in mid/late March 2020, a new Finance Act. This will leave only a few weeks until its IR35 provisions come into effect on 6 April 2020, assuming that HMG does not delay the changes until later this year or 2021.

This tight timetable is problematic for anyone who might be affected by IR35 rule changes since it is still possible that the IR35 provisions in the Finance Act could differ from the current Finance Bill, and the final version of the Bill will not be seen until late in the process.

Whether you are a worker who uses a PSC, or a client of a PSC, or an intermediary between either of them, or an in-house or external adviser to anyone who might be affected by the changes, this will be a cause of concern and frustration because it is exceedingly difficult to plan fully for what are, at the moment, still unknown possible final changes to the current IR35 regime, and an unknown commencement date.