Budget changes to IR35

Following an earlier comment from the now Prime Minister Liz Truss to simplify the off-payroll/ IR35 rules to make it easier to remove unnecessary administrative burdens for business, the Chancellor, in his mini budget, has gone one further and announced that Government will repeal the 2017 public sector and 2021 private sector reforms.

This means that from April 2023 neither public nor private sector engagers will be required to consider the off-payroll rules, leaving the worker to decide whether IR35 applies to the engagement just as was the case prior to the 2017 changes.

Government had indicated that it would keep compliance under close review, although there was no additional comment as to how that might be done.

One can only assume that HMRC may look to re-introduce some form of requirement for all personal service companies to confirm, via tax returns or RTI submissions, that they are an intermediary, that IR35 has been considered and that a deemed payment was not necessary. In turn, this could leave the door open for HMRC to use that information to open an inquiry.

Only time will tell but if you wish to discuss the impact of these changes then please contact our team of experts who will be able to provide advice.