Is the repeal of the 2017 and 2021 reforms to the off-payroll working rules as part of last month’s ’Mini Budget’ statement the good news our contractors, employers and agencies wanted? What do you think? Are you ready for a change and do we actually know what the new legislation will mean?
Dave Hedges is a tax partner at Azets and says there is “an absence of fine detail” around how HMRC will manage the transition over the coming months. “While the changes are welcome and have been lobbied for, we are advising clients throughout the engagement chain to tread carefully pending clarification,” he said.
Some questions remain following the chancellor’s announcement that the Off-Payroll Working (OPW) rules are to be repealed from April 6th 2023. There are three main reasons for this:
Is it really going to happen? Nothing has changed yet and we have a Budget coming up in November, preceded by a government already doing a U-turn on its 45p tax rate plan. The possibility of further U-turns therefore seems significant. Fingers crossed that this promised repeal of the OPW rules goes ahead. But it’s not certain.
End-clients (both public and private sectors), agencies, umbrella companies, accountants and IR35/OPW advisers are all taking stock and wondering how this could affect their business. And yes, that goes for me too!
Contractors are realising that unless they have always been outside IR35 and working for ‘small’ companies (not affected by the OPW rules), that their own circumstances are complicated. Notably where the contractor is:
currently with an umbrella, or
holding an SDS where the client has stated ‘inside IR35’, or;
regularly jumping between their PSC and an umbrella company depending on the IR35/OPW assessment.
At this stage (Q4 2022), nobody knows how the repeal of the OPW rules will work. That’s the unpopular, hard truth. Many commentators are reaching for their crystal balls, with some suggesting that there will be new rules for contractors added onto the IR35 rules of old (2000), such as requiring contractors to complete Status Determination Statements. There’s even the odd whisper that end-clients will continue to determine IR35 status; that blanket bans on using PSCs will continue indefinitely, and that HMRC will declare some sort of ‘amnesty’ on prior SDSs with ‘inside’ results. As interesting as they are, these really are only opinions at this stage and should be taken as nothing more.
So what can we do now? Every part of the contracting chain needs to use this time to analyse the effects on their own businesses and it is vital that all get up to speed with IR35 version one (2000).
Keep watching the contractor press for developments (the contractor ‘press’ that doesn’t just stick a press release up!).
Decide what you want to do -- if you could.
Collect and keep all evidence including SDS outcomes, online IR35 status tool outputs, end-client correspondence, contract review results, and working practices changes/opinions.
Find out about your personal situation now, to see what the options and (above all else) the risks are, and if a change in your status is feasible.
Speak to your client and find out what their position may be come April 6th 2023, especially if you are contracting with an organisation that has banned PSCs.
Take advice from only those that, as impartial as possible, understand all the rules (from 2000 onwards), and ideally those with hands-on experience of successfully defending IR35 HMRC investigations.
This could be great news for professional interim and self employed workers, it could be great news for large private companies and the public sector to attract and retain key skills to help them deliver growth and it could be great news for those involved in the supply of these people. For now, keep up to date, get planning and be ready, April will soon be here…