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. After two decades of HMRC hectoring the government into tightening the IR35 rules to make businesses (and other organisations) responsible for deciding the employment status of individuals who work for them through an intermediary, it eventually achieved its goal with the introduction of the “off payroll” rules in 2017 and 2021. However, in just 20 seconds of the Chancellor’s speech he swept all this away. The decision on whether work meets the criteria for employment or self-employment will revert to the individual in all cases instead of just those that qualify as “small”.
Trap. IR35 only affects individuals who provide their services through an intermediary which they wholly or partly control, e.g. a company or partnership. If your business uses the services of an individual who doesn’t work through an intermediary, you continue to be responsible for deciding their employment status.
Lame-duck rules? Overturning the off-payroll rules can’t be done overnight and so the 2017 and 2021 rules won’t be withdrawn until 6 April 2023. This leaves HMRC, workers and businesses etc. that use their services in limbo. While HMRC is yet to comment on the withdrawal of the off-payroll rules , it ought to take the sting out of any HMRC efforts to police and enforce the rules. However, based on previous form we don’t expect any let up. Even after 5 April 2023 HMRC will be entitled to make enquiries into off-payroll arrangements that existed before.
Tip. Unless or until HMRC sets out an intention to slacken its approach to off-payroll rules , anyone affected should continue to follow the rules diligently (see The next step ). We will of course bring you news of any further developments on off-payroll working as it happens.
It’s good news if you work through an intermediary or are a medium or large business that uses their services. You’ll have to wait until April 2023 for the rules to be repealed, until then stick closely to the current version.
The next step
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