IR35 Off-payroll reforms 2020 - the draft legislation
On the 11th July, the government issued the draft legislation around plans for the off-payroll IR35 reforms to be rolled out to the private sector in April 2020.
Many of you will already have a deep understanding of the topic – the public sector roll out was in 2017 and the private sector roll out was pushed back to 2020 from it’s original implementation date of April 2019. But for those that don’t, what’s going on?!
IR35 has been around for many years. It was introduced to legislate the relationship between a contractor and an end-user, specifically when the contractor engages using a limited company. It tests whether there is a genuine business relationship or whether the contractor is in ‘disguised employment’ – ie, should be classified as an employee, rather than using their limited company for tax benefits.
Previously, the liability for deciding whether a limited company was inside or outside IR35 fell on the director of the limited company. In April 2017, the first reforms were introduced to public sector assignments and in April 2020 this extends to the private sector, this covering all limited company assignments.
The main change in 2017 was that the liability for IR35 shifted to the fee payer (often the recruitment agency), using an assessment from the end-client as to whether the limited company was inside or outside of IR35.
So what’s new in this 2020 draft legislation:
Based on the original 2017 public sector reforms
Introduction of the ‘status determination statement’ from end-clients, stating whether the limited company is inside or outside IR35. The end-client will remain the fee payer (and liable) until this is passed on to the recruitment agency
There will be an end-client disagreement process, where the end-client will have to review and provide a decision on the status decision within 45 days
There will be further advice on what constitutes ‘reasonable care’ when making the IR35 assessment
The draft legislation certainly provides a few answers, but many questions remain.
We’re currently engaging with many of our recruitment clients to discuss these changes and in many cases are providing IR35 training so recruitment consultants have at least a basic understanding of the forthcoming changes. If you’d like us to come in to your offices, contact your dedicated business development consultant or ring us on