In a previous article posted to this site entitled ‘IR35 | Off Payroll Working Rules’ we explained the nature of ‘off payroll working’ within UK tax legislation designed to prevent tax avoidance by workers supplying their services to clients through an intermediary.
Tim Thompson of Kangs Solicitors now outlines changes to the legislation anticipated to become effective on 6 April 2021.
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The Proposed Changes to IR35 | Tax Avoidance Solicitors
The changes are designed to bring the regulations affecting the Private Sector in line with those in operation for the Public Sector as follows.
If a worker provides services to a small business, any intermediary, such as a ‘Personal Services Company’, is responsible for deciding that worker’s employment status and for assessing the extent to which the rules apply.
To qualify as a ‘small business’, two of the following criteria have to be met:
- annual turnover is no more than £10.2 million,
- the Balance Sheet total is no more than £5.1 million,
- the number of employees does not exceed fifty.
Medium or Large Businesses
If a worker provides services to a medium or large business, the responsibility to ensure compliance with IR35 by accounting to HMRC for all associated tax and NIC falls to the business to which the services are actually supplied and not the intermediary, or Personal Services Company.
Legislative provisions are also anticipated to prevent subsidiary companies from being utilised to circumvent the efficacy of the regulations.
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Issues involving HMRC can be very confusing, worrying and daunting but are frequently resolved with a proactive approach.
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