From April 2020, many of you who supply your services through a personal service company to large and medium sized businesses may find your fees are paid after Income Tax and National Insurance has been deducted.Under the new Off-Payroll Working (IR35) rules, it will be the responsibility of your client to assess your status.If they decide you are employed, you will be taxed as though you are an employee under PAYE.
Key Considerations for Contractors before April 2020
The idea behind Off-Payroll Working is to move the determination of a workers status from you and your Personal Service Companyto your end client.If you disagree with your clients determination, youll have to argue your case with your client; not HMRC. If your contract has remained unchanged for many years and your clients determination is different to yours, you may be contacted by HMRC and asked to review the position for earlier years.
If you operate through a PSC, review your position now.Read and evaluate on-line information in HMRCs manuals to establish if Off-Payroll Working will apply to you from next April.If you are concerned that it should have applied in the past, it would make sense to make an unprompted disclosure to HMRC in order to minimise penalties.
The introduction of ‘Off-Payroll Working’ will inevitably leave a nasty sting in the tail.In fact, HMRC have already written to a number of PSCs who provide services to GlaxoSmithKline suggesting they review the position and either provide evidence of not falling within IR35/Off-Payroll Working by 19 September or settle outstanding Income Tax and National Insurance by 22 September.
HMRC is hoping for a windfall, the clock is ticking!
Forewarned is forearmed; if you are in doubt or need further advice, speak to CKLG Accountants on 01223 810100.
