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.