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New IR35 Rules from 6th April 2017

Mar 14, 2017

From 6th April 2017, HMRC are introducing new legislation regarding intermediary companies who work for public sector bodies.

The responsibility for determining the status of the contract existing between the intermediary company and the end user client is now that of the public sector body. (Intermediary companies working for private sector end user clients are not affected at this stage).

A toolkit is available on HMRC's website at:

https://www.gov.uk/guidance/check-employment-status-for-tax

whereby the status of the particular contract can be checked.

The general opinion of the profession, however, is that the public sector body will simply operate PAYE and NIC and not take into account the results of the employment status test. This will have an adverse effect on the net income of the intermediary company and does not seem to represent a true and fair interpretation of the new rules which can be found at:

https://www.gov.uk/government/publications/off-payroll-working-in-the-public-sector-reform-of-the-intermediaries-legislation-technical-note/off-payroll-working-in-the-public-sector-reform-of-the-intermediaries-legislation-technical-note

Prior to these new rules, the onus was on the intermediary company to determine the status of the contract and apply IR35 if applicable.

Please contact us if you think you are affected by these rules and would like to discuss your position further.