Her Majesty’s Revenue and Customs (HMRC) Set to Extend Off-Payroll Tax Rules into The Private Sector


Beginning on 6 April 2021, new IR35 legislation will come into effect for the private sector in the UK, aligning with how a contractor’s IR35 status is already determined in the public sector. IR35 was introduced to address situations where companies have historically engaged contractors on a self-employed basis which, in turn, disguised them as employees and created tax discrepancies. In just a few months, this will all change. Companies engaging these contractors will take on the responsibility for these inconsistencies and must clearly determine a contractor’s IR35 status in the private sector.

As you prepare for IR35, key points to consider include:

  • - End-users must now assess the tax status of their engagements in question in a Status Determination Statement (SDS), which must be shared with both the worker and the party the client contracts with.
  • - All parties must “take reasonable care” when developing their SDS. The employment status manual issued by HMRC provides examples of what does and does not constitute “reasonable care.”
  • - The worker or fee payer may challenge the SDS if they think it’s incorrect and the end-user has 45 days to resolve this disagreement process.

As April quickly approaches, it’s important that your company has done everything it can to successfully adopt the legislation. PRO Unlimited’s comprehensive IR35 guide addresses the changes that are coming and provides several tips to help your company avoid the employee misclassification penalties that come with the new set of rules – saving thousands of dollars in avoidable costs.

To see the steps you can take to prepare for IR35, click here to view the full guide!

If you’re interested in learning more about how PRO is helping organizations implement winning contingent workforce programs globally, please contact a PRO representative at 800.291.1099 or email at info@prounlimited.com.

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of PRO Unlimited and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.