Kwasi Kwarteng recently announced in the mini-budget that off-payroll IR35 reform will be repealed next April, but what does that mean for contractors and businesses?
Here, we explain how these changes may impact you and how to ensure you remain compliant.
When will the changes come into effect?
On the 6th April 2023 public sector and medium to large private sector businesses will no longer be required to administer the off-payroll rules. Businesses must continue to prioritise their compliance with IR35 until this date.
Will IR35 be scrapped completely?
No, IR35 legislation itself will not be scrapped. The responsibility for assessing IR35 status has just shifted back to the contractor.
Why have the IR35 rules been repealed?
Several businesses have had difficulty implementing the off-payroll rules or have stopped engaging with contractors altogether and as a result, the UK labour market has suffered. In one of the most pro-contracting moves the government have ever made it is hoped that by removing this layer of unnecessary complexity and cost, businesses can focus on growth.
Are contractors still to be assessed (and reassessed) by businesses?
Yes, it will remain a legal requirement until the contractor takes over responsibility in April. This applies to all newly engaged contractors, as well as those who have already been engaged and require reassessment.It is essential that status assessments, contractor engagement policies, and applicable records are maintained and robust as businesses will remain liable for engagements made between 2017 (public sector) / 2021 (private sector) and April 2023.
Is HMRC planning to ramp up investigations before April 2023?
HMRC conducted extensive compliance activities before the Chancellor’s announcement, and we do not expect this to change.
Between now and April, what should businesses do?
- In order to ensure compliance with the off-payroll rules, businesses should maintain their existing processes.
- Keep a comprehensive record of all status decisions.
- Help contractors adjust to their new responsibilities by maintaining communication with them. Businesses should ensure fair engagement of contractors whilst also ensuring compliant working arrangements for contractors who were required to use umbrella companies.
How can we help?
As a client or contractor, V7 Recruitment can assist you in ensuring your processes are compliant. As part of our mission to provide our clients and candidates with access to sector experts who genuinely care about delivering the very best services and opportunities, we will continue to provide guidance for both businesses and contractors and will support contractors with their new responsibilities.
Great post!