Are your systems IR35 ready?

As previously reported, the government launched a review of the changes to the IR35 rules. The IR35 rules apply to contractors who provide services through a limited company but whose working arrangements are more like those of a directly engaged employee. Changes in the rules from 6 April 2020 make the client, rather than the contractor, responsible for assessing the contractor’s tax status. If the individual is deemed an employee, they will be ‘within IR35’ rules.  The client has to deduct tax and national insurance (NI) through PAYE and pay employer’s NI contributions.

Where an agency is involved, responsibility for tax and NI can pass to the agency. For this to happen, the client must comply with the rules on providing a status determination statement and the rules on dealing with any objection from the contractor about the status determination statement.

A welcome, early outcome of the review was announced by the government on 7 February 2020. The new rules will only apply to services delivered after 6 April 2020. Previously they would have applied to any payments made after 6 April, even if the services were provided before 6 April.

With little time left until 6 April, now really is the time to prepare, if you have not already done so. Magma can help get your business ready.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.