Off-payroll changes could create ‘confusion’ for businesses and freelancers

The government agency wrote to customers this week announcing it has relaunched its programme of support to help companies and contractors get ready for the new regime from April 2021.

Earlier this year, HMRC delayed the introduction of IR35 for 12 months to help businesses and individuals deal with the economic impact of COVID-19.

In its new correspondence, HMRC said: “We recognise that businesses are facing difficult challenges due to COVID-19. HMRC is providing information and support now to ensure businesses have plenty of time to prepare for the changes coming into effect in April 2021.”

IR35 rules apply if a worker provides their services to a client through an intermediary, but would be classed as an employee if they were contracted directly.

The rules are intended to make sure all workers pay broadly the same tax and National Insurance contributions.

From April 6, all medium and large-sized private sector clients will be responsible for deciding if the rules apply.

Ian Anfield, managing director of Bridlington-based Hudson Contract, said: “This announcement will go down like a lead balloon with companies and freelancers fighting for survival in a difficult trading environment with the constant imposition of new lockdown restrictions.

“In the best of times, businesses and freelancers found the HMRC guidance on IR35 difficult to follow, causing confusion and concern over liabilities. The latest set of guidance runs over hundreds of pages and invites companies to attend online seminars which HMRC plans to run between now and April next year.

“The confusion has created a vacuum for bad advice with so-called HR specialists and umbrella organisations offering services which could lead to incorrect and potentially damaging determinations for companies and freelancers alike.

“Freelancers could find themselves in the worst of all possible worlds, paying employer and employee taxes but without any of the benefits of actually being employed and their clients would face losing access to a valuable resource if they refuse the terms.

“We urge businesses and freelancers to seek genuine expert help and avoid blanket determinations or quick fixes if they want to safeguard their interests.”

Hudson Contract launched Hudson Freelance in 2016 to help the clients of construction-related freelancers such as quantity surveyors, estimators and project managers.

It has spent the last 18 months helping its clients prepare for IR35, looking at individual cases.

The news that HMRC is pressing ahead for April has prompted Hudson to relaunch the service with new software for freelancers, which incorporates IR35 auditing measures and the offer of free consultations for client companies worried about the changes.

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James Mitchinson