Previous changes to IR35 administration to be implemented without any further modification.
Beyond those announced in the review published on 27 February 2020, there will be no further amendments to IR35.
In essence, any large businesses contracting for provision of services will need to consider whether the Off Payroll Working Rules apply, in which case the large business will be responsible for assessing whether the engagement falls within the intermediaries rules (IR35) and if so, communicating that finding to the service provider and applying the appropriate payroll tax deductions to any payments made.
The new obligations are covered in the IR35 pack, subject only to the minor modifications announced on 27 February. These include:
Penalties: HMRC will not enforce penalties for errors relating to the new rules for the first year except in cases of deliberate non-compliance. However, HMRC will collect any taxes due, and the Office of Budget Responsibility has confirmed that the yield estimates for the measures have been maintained at the previously estimated levels in the light of the revised penalties policy.
Size of client: The draft legislation has been amended to provide that the worker or any agency can request information from the client about their size, in order to clarify whether an SDS should be expected. If the client is small, the existing obligation on the PSC to operate IR35 will remain in place.
Overseas clients: The draft legislation has been amended to confirm that where a client is ‘wholly overseas’ the existing obligation on the PSC to operate IR35 will remain in place.
The updated draft legislation will not be published until 19 March 2020, giving businesses 11 working days to develop and implement information request mechanisms and confirm compliance with the updated overseas clients rules.