[UK] Secondary Draft Legislation For Off-Payroll Reforms Published By HMRC


On 22 January 2020, HMRC published draft secondary legislation for the off-payroll working rules (IR35) which will come into force in April, Employee Benefits reports on the legislation and the reactions to it.

IR35 was introduced in 2000 to make sure that individuals who are working like employees but through their own business pay similar taxes to equivalent direct employees. The reforms coming in April will move the burden of responsibility for assessing employment status to those medium and large organisations employing the individuals.

To minimise the admin burden, small organisations will be exempt and HMRC has pledged to give support and guidance to non-exempt organisations before implementation.

The new draft legislation includes details on how the government intends to operate the transfer of debt obligations. It is open for consultation until February 19, 2020. 

On January 7, 2020, the government launched a review of the upcoming changes. The review has now been restricted to solely consider how to implement the rules smoothly. (Link via original reporting)

Jesse Norman - financial secretary to the treasury - said, 'We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules. The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.'

Susan Ball - employer solutions partner at RSM - said, 'Many businesses may have been hoping that this review and earlier responses to the draft primary legislation offered the possibility that some of the more controversial elements of the rules, notably those relating to the transfer of debt provisions, may be delayed or dropped. However, the publication of this draft legislation today has upped the ante and suggests that the government is pressing ahead.'

Businesses that engage contractors, intermediary firms that find and place contractors, as well as contractors themselves, should all read this draft legislation carefully and feed back any concerns before the consultation closes on 19 February.

'While there may be a very short window for minor changes resulting from the review to be included in the tabled final legislation, businesses and contractors need to carry on with their preparations with the expectation that the majority of the provisions contained in today’s draft and the primary legislation issued in July 2019 will reach the Statute Book.'