HMRC's IR35 Status Checking Tool Has Been Updated
Why is this important?
POSTED BY JONATHAN VOWLES ON 03/12/2019 @ 8:00AM
IR35 affects quite a lot of people! Up and down the United Kingdom, individuals are providing their services to a client via a limited company, LLP or via self-employment ...
Have your checked your IR35 status yet? The Off-Payroll Working Rules come into force in April 2020 for the private sector!
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HMRC is trying to collect more tax from working individuals via the Off-Payroll Working rules. From 6 April 2020, these new rules will apply to people working in the private sector as well as those in the public sector.
The Off-Payroll Working Rules apply if a worker provides their services through an intermediary, but would be classed as an employee if they were contracted directly. An intermediary is the worker's limited company or LLP, but it can also be where a worker is self-employed.
The core of these rules is that, where they apply, then the fee-payer is responsible for deducting the Income tax and National Insurance contributions as if the worker was an employee and paying these to HMRC.
"And they can be penalised for getting it wrong!"
In most cases, the organisation paying a worker's intermediary will be the fee-payer. To be a fee-payer, you must be the 'lowest party' in the labour supply chain. This is usually the person paying the worker's intermediary. If you are a client, or another part of the deemed employment chain, then it is very important to work out who is the fee-payer and check it isn't you!
The end client is responsible for preparing a status determination. The client will need to pass the worker's employment status determination to the agency or other organisation they contract with. The determination should continue to be passed on, until it reaches the party immediately above the worker's intermediary. This party is known as the fee-payer or deemed employer.
The status determination can be checked using HMRC's online checker, which can be found here.
The status checker is important and, providing you have answered the questions accurately, can be relied upon as a defence should HMRC query a status determination. If you are a worker or a client then you should use this tool. Reviewing the answers now puts you in the position of being prepared in advance of the 6th April 2020 implementation.
And, if you are currently caught by IR35 and the Off-Payroll Working Rules, then this status checker gives you an opportunity to check your determination and potentially argue against it!
Until next time ...
Would you like to know more?
If you're unsure of your IR35 status or are worried about Off-Payroll Working Rules, call me on 01234 752 566, leave a comment below or click here to ping over an email and let's see how I can help you.
About Jonathan Vowles ...
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas, which can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.
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