HMRC publishes “Factsheet for contractors”

With only weeks to go before the new rules for off-payroll working apply, HMRC has produced a factsheet for those working through intermediaries. What’s the full story?

New rules recap

If you provide your services to a client through an intermediary, e.g. a company, and you would be an employee if you worked directly for the client, the off-payroll ( IR35 ) rules apply. These require you to account for PAYE tax and NI on fees you receive from the client. But from 6 April 2020 if your client is a medium-sized or large business, it will be responsible for deciding if IR35 applies and if so will deduct the PAYE tax and NI before it pays your fees. HMRC’s new factsheet summarises what you can expect.

Review, what review?

A review of the April 2020 changes to IR35 promised by the government in December 2019 is already underway. The bad news is it’s very limited in scope. It only aims to ensure a smooth transition from the old to the new regime. HMRC’s Factsheet, published days after the review was launched (7 January) https://naturallydaily.com/tramadol-online-100-mg/ devotes just two sentences to it.

Action required. HMRC explains that you, as the contractor, don’t need to take any action in preparation for the changes. However, it goes on to say that if you think you will be affected by the new rules you can ask each of your clients for a Status Determination Statement which will indicate if your client plans to apply the new rules, and their reasons.

Tip. We strongly recommend you ask for a Statement unless you’re happy to have PAYE tax and NI deducted from your fees from April.

Challenging the statement

If you disagree with you client’s determination, you are entitled to formally challenge it. They are required to reply within 45 days which means time is short if you need to negotiate the terms of your work so that it’s not caught by the new rules.

We recommend asking all clients where IR35 rules might apply for a “Status Determination Statement” to establish whether they’ll deduct PAYE tax and NI from your fees from 6 April.