Empresaria : The clock is ticking again! Off-payroll working rules from 6 April 2021 - extension of IR35 to the private sector.

21 December 2020 by Deborah McWilliams

​The legislation is in place and there does not look to be a U-turn coming, so from 6 April 2021 IR35, or now the so-called "off-payroll working rules", will be extended to the private sector. Large and medium companies who hire contractors (either directly or via agencies) will be responsible for assessing the IR35 employment status of each of these contractors for each assignment undertaken. This IR35 assessment will determine whether the contractor needs to be paid via PAYE ("inside IR35" - effectively as an employee for tax purposes) or can be paid gross if the contractor operates via a personal service company ("outside IR35").

This gives businesses a few months to prepare for what can be a complex task, with serious consequences for businesses if you get it wrong. The legislation includes tax debt transfer rules so whilst the responsibility for making the PAYE income tax and NICs deductions and paying employer's NICs is on the company paying the limited company contractor, the debt transfer rules do give HMRC the ability to transfer the liability for any unpaid taxes in the supply chain to end-user clients. Deborah McWilliams, Empresaria Group Tax Manager, stated "we are urging all our UK Empresaria brand clients to review the potential impact of these changes now and establish a timeline to implement any changes required. Additionally, the new rules will catch contractor placements made now which will run past 6 April 2021."

Suggested actions:

Action 1	Action 2	Action 3	Action 4
Review contractor workforce and future contractor requirements, review how you work with contractors/ freelancers, consider indicative IR35 assessments for common contractor assignments.	Discuss with your trusted agencies what changes may need to be made to current and future contractor roles and/or contractor engagement and pay arrangements.	Implement any changes required to your engagement arrangements and contractor roles. Ideally this would be based on a tailored approach for each contractor role.	With your chosen solutions in place, you should be protected against the upcoming legislation. Set up processes to monitor ongoing compliance.

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We can help you to deal with these additional responsibilities including identifying and implementing the best solutions to help protect you from potential tax and employment liabilities.

Businesses need to ensure that they take the necessary precautions throughout their decisions process. Whenever necessary, contractors must notify their customers about the legislation.

It is vital to understand your new responsibilities created by the legislation. These liabilities are crucial in ensuring that your company is legally operating under all legislation.

At Empresaria, we service 6 sectors across 20 countries. Our global spanning brands can help you deal with these responsibilities. Whether you are a client needing guidance, searching for the most efficient solution for implementation or helping to protect your company, the Empresaria brands can help.