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COMMENTARY: IR35 off-payroll changes postponed

As part of the Government’s response to Covid-19, the introduction of reforms to IR35 (which will make medium and large organisations in the private and third sectors responsible for determining the tax status of contractors) has been delayed until 6 April 2021.

This means that the responsibility for making that determination will remain with the contractor’s personal service company for one more tax year.  

Unfortunately, the postponement has come too late for the many contractors whose clients have already made policy decisions to cease using contractors.  In such cases, the contractors having been faced with the choice of becoming employees or losing the engagement altogether. 

The postponement announcement is unlikely to change their positions, but it does mean that contractors and their clients have more time to review their standard contracts and, just as importantly, the actual work practices with a view to maintaining independent contractor status. 

The employment and tax teams at Druces can help whether you are a contractor or a business concerned by the effects of the reforms.

 

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