IR35 on hold
legal update Delayed, not cancelled: the next steps for IR35 By Lewina Farrell, Legal Advisor at REC
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n 17 March 2020 the government answered the REC’s call to delay the IR35 tax changes un l April 2021. This means the current rules, in both the public and private sectors, will apply up to and including 5 April 2021. So, if you’re dealing with a client in the private sector, they don’t have to do anything about IR35 at the moment. If the client is a public authority, the rules that took effect in April 2017 remain in place. Some businesses have already prepared for IR35. And some private sector clients have decided that some roles are ‘inside IR35’. So what should recruiters do?
From a legal perspecঞve The rules aren’t changing
Don’t lose sight of standards – especially at a ঞme of crisis sign up at www.rec.uk.com/ membership/how-tojoin 6
Recruitment Ma ers May 2020
RM_MAY 2020-v1.indd 6
un l April 2021. Neither the client’s obliga on to provide a status determina on statement (SDS), nor the fee-payer’s obliga on to deduct tax and na onal insurance, apply for the me being. So, even where a client has determined that a role would have been inside IR35 from 6 April 2020, there is currently no obliga on on the fee-payer to make any deduc ons before paying the Personal Services Company (PSC).
“The current rules will apply up to, and including, 5 April 2021.”
From HMRC’s perspecঞve HMRC said that SDSs made before 6 April 2020 will have no standing. It also said that it will not consider any SDSs made if it opens an inves ga on into a contractor in the mean me. Coronavirus may have rocked our economy, but this is no excuse to lose sight of our standards and the importance of compliance. Calami es like these are an opportunity to showcase your commitment to best prac ce and professionalism to help the economy back on its feet. When candidates and clients are worried, they will be predisposed to working with those they can trust. REC Professionals have to abide by the REC’s Code – the founda on for ethical and transparent recruitment prac ces. Since the dawn of Covid-19, we saw our members rise to the challenge, to support the people who have been affected the most. By signing up as an REC Professional, you’re also signing up to become a brilliant
Some contractors may want to con nue to work through their PSCs. Agencies and clients can agree to this, but some may choose not to. The agency can con nue to pay the PSC gross and will not be liable for their failure to comply with IR35 unless, under exis ng legisla on, it can be shown that they are facilita ng tax evasion. Blanket decisions Some businesses decided not to allow contractors to work through PSCs past a certain date. They may con nue with this ban, or may now allow those contractors to work through PSCs un l the changes in 2021. Some contractors may choose to stay on PAYE if, despite the lost income, they decide it is more beneficial to be en tled to rights such as sick pay and holiday pay. Note that this is a delay, not a cancella on. All other legal changes resul ng from the government’s Good Work Plan came into effect on 6 April. Agencies and clients will s ll have to implement the IR35 changes by April 2021. The REC will support members to do this and our IR35 hub on our website is there to help our members.
recruiter, while con nuously progressing in your career. Signing up is easy. Depending on your experience, you will become an Affiliate, Member or Fellow REC Professional (recognised by the industry as AREC, MREC or FREC respec vely). You can also claim 20% off all future recruitment training courses, exclusive lifestyle benefits and networking opportuni es. Your REC Professional membership will become a way of life as you climb up your career ladder. To become an REC Professional, contact Joseph Solich at joseph.solich@rec.uk.com or sign up at www.rec.uk.com/membership/ how-to-join www.rec.uk.com
07/04/2020 12:26