UK: Be Aware: IR35 implementation review confirms April 2020 start date


With weeks to go until the new IR35 rules come into force, the government has released the findings of its off-payroll implementation review, confirming that the off-payroll rules for the private sector will go ahead as planned on 6 April 2020.

A few minor changes, which had already been announced, are clarified in the review report. The main points to note are:

  • The government’s only significant concession is to introduce a light touch approach to penalties for the first year of operation. Fines will not be issued in the first year unless HMRC suspects tax evasion or abuse of the system;
  • There will be a new legal obligation on client companies to respond to a request for information about their size from the agency or worker;
  • The government has committed to not operating the rules retrospectively; the new rules will only apply to payments for services carried out on or after 6 April 2020;
  • HMRC will keep the dedicated IR35 project team in place to help with enquiries and maintain a communication programme with affected large and medium-sized businesses;
  • Information resulting from changes to the rules will not be used to open new investigations into personal service companies for tax years prior to 6 April 2020, unless there is reason to suspect fraud or criminal behaviour; and
  • The legislation will be updated to address confusion about how the rules apply to offshore companies.

HMRC has published guidance on the new rules and updated the Employment Status Manual earlier this month to include examples and case studies.

For further information and assistance please contact David Smith or Richard Johnson from our Tax Group or your usual DLA Piper Employment Group contact.