Among the surprising announcements made by the Chancellor in his mini-Budget was the cancellation of the changes made to the IR35 rules in 2017 and 2021. How might this affect you or your business?
Mini-Budget. With the introduction of the “off payroll” rules in 2017 and 2021, HMRC finally achieved its goal of pressuring the government to tighten the IR35 rules and make businesses (and other organisations) responsible for determining the employment status of people who work for them through an intermediary. However, the Chancellor brushed all of this aside in his address in under 20 seconds. Instead of just applying to situations that fulfil the requirements for “small,” the choice of whether a task qualifies as self-employment or employment will now be left up to the person.
Trap. Those who deliver their services via an intermediary they fully or partially control, such as a firm or partnership, are the only people who are impacted by IR35. Your company is still in charge of determining a person’s employment status if it employs them directly rather than through an intermediary.
Lame-duck rules? The 2017 and 2021 rules won’t be withdrawn until 6 April 2023 because repealing the off-payroll rules can’t be done overnight. As a result, their clients—HMRC, employees, businesses, etc.—are left in a predicament. The off-payroll rules’ removal should lessen the impact of any HMRC efforts to police and enforce the rules, though HMRC has not yet commented on the matter. We do not anticipate a letup, though, based on past performance. HMRC will be permitted to conduct investigations into previous off-payroll arrangements even after 5 April 2023.
Tip. Anyone affected should continue to adhere to the rules strictly until HMRC makes it clear that it intends to relax its approach to the off-payroll rules (see The next step ). Naturally, as soon as there are any new developments regarding off-payroll work, we’ll let you know about them.