Prepare for the new IR35 private sector rules
13 August 2020
The proposed IR35 private sector rules, which will require large and medium-sized end engager organisations to assess the employment status of workers, are due to come into effect on 6 April 2021.
HMRC recently published a briefing paper in which it stated that it would use information resulting from the proposed changes to open a new enquiry into earlier years if it had reason to suspect fraud or criminal behaviour. This rather contrasted with an earlier Treasury statement that HMRC would not carry out targeted campaigns into previous years when individuals start paying employment taxes under IR35 for the first time.
Recent IR35 cases
HMRC is continuing its enquiries into arrangements under the current rules, with mixed results.
The most recently reported cases include:
- The Christa Ackroyd case, in which the Upper Tribunal upheld the First-tier Tax Tribunal’s (FTT’s) ruling that the BBC exercised control over the work undertaken by the presenter. This Upper Tribunal ruling is a binding precedent, and gives an indication of how similar future cases are likely to be considered.
- The RALC Consulting case (decision not yet published), in which the FTT ruled that the worker was self-employed, mainly on the basis that there was no mutuality of obligation.
- The Canal Street Productions case, in which the FTT ruled that a TV presenter who carried out work for ITV was self-employed, mainly on the basis that she worked under a series of short-term engagements, with no guarantee of further work outside those engagements, and with no obligation on ITV to provide any work.
HMRC’s CEST tool and guidance
There have been complaints about HMRC’s Check Employment Status for Tax (CEST) tool, with some organisations being challenged by HMRC after CEST had indicated that the workers in question were self-employed. HMRC now states that an enhanced version, and additional guidance, will be provided by the end of 2019.
It is important that advisers ensure that their clients are prepared – a recent survey showed that about a third of private sector organisations are still unaware of the impending change.
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