AS THE government’s overhaul of the IR35 off-payroll working reforms gets under way, Russell Taylor Group is assisting contractors to stay compliant until legislation is finalised.
In his recent mini-budget, Chancellor Kwasi Kwarteng announced that changes made to the rules in 2017 and 2021 are now to be scrapped.
However, the planned repeal of the IR35 reforms - believed to be one of the most “pro-contracting” measures in memory - will not happen until April 2023.
Russell Taylor Group managing director Rob Kurton explained: “Nothing will happen immediately to change the current situation relating to IR35 and it’s therefore vital that contractors who will be affected by these changes carry on as normal for the next six months.
“Every operational sector in the UK will be affected by this government decision - construction and civils, technical, engineering, manufacturing, scientific and pharmaceuticals - and it’s probably one of the most pro-contracting measures in living memory.
“First and foremost, contractors need to know these reforms have not yet been repealed and this won’t happen until the Finance Bill, the government’s vehicle for renewing annual taxes, delivering new tax proposals and maintaining administration of the tax system, comes into force at the beginning of next April.
“Until then, all our partnering contractors need to be aware of this situation and that they must stay within the current system to stay legally compliant.
“To ensure this, we have now begun a programme of guidance for the businesses which will eventually be affected by these far-reaching changes.”
The decision to repeal the IR35 off-payroll reforms is part of the Chancellor’s series of tax cuts and adjustments aimed at making the UK more competitive on the global stage and was an unexpected U-turn for the government.
In broad terms, IR35 regulations make sure that workers, who would have been employees if they were providing services directly to the client, pay the same Income Tax and National Insurance contributions as employees.
With its reforms in 2017 and 2021, responsibility for the IR35 status of contractors passed over to their end client and was seen by many to have had major impact on the UK’s flexible labour market. As part of the changes, the liability also shifted from the contractor to the fee-paying party in the supply chain.
Repealing the current legislation will result in reverting back to the days of contractors determining their own IR35 status.
Steve McCarthy, operations manager for Russell Taylor Group’s Technical and Engineering Division, acknowledges there could be some confusion among contractors over the repeal of the IR35 off-payroll working reforms and said: “It is so important that businesses realise the current regulations are still in force and will be until April 6, 2023.
“As well as seeking advice and guidance from their accountants, we are happy to work with them and to help them through any problems as there will be new issues to cover - for instance, whether a role is actually deemed inside or outside of IR35.
“The main thing is though that they carry on operating within the current system over the coming months to ensure their legal compliance.”
Steve can be contacted by email at email@example.com or by phone on 0151-304 7034.