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24 July 2019
The government is committed to cracking down on disguised employment. In order to achieve this, the IR35 rules will change from April 2020.(1) Businesses that engage contractors (or off-payroll workers), whether directly or through an agency, who are providing their labour through an intermediary, such as a personal services company (PSC) (ie, a company owned and controlled by the contractor), must make changes well ahead of April 2020.
The IR35 rules apply where contractors personally provide services via an intermediary (eg, a PSC). However, if the contractor is directly engaged, they would be considered an employee or office holder for tax purposes.
Currently the PSC or intermediary must consider employment status and account for pay-as-you-earn (PAYE) and national insurance contributions (NICs) where necessary. From April 2020 that is changing and, instead, businesses must assess employment status and operate PAYE and NICs as appropriate.
For example, if a business engages a contractor through a PSC, they must:
The changes will also apply to more complex labour chains, so an early understanding of the labour supply chain is critical.
Before April 2020, businesses must:
For further information on this topic please contact Lucy Lewis or Victoria Goode at Lewis Silkin by telephone (+44 20 7074 8000) or email (firstname.lastname@example.org or email@example.com). The Lewis Silkin website can be accessed at www.lewissilkin.com.
(1) More information about IR35 changes and the steps to be taken is available here.
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