Changes to off-payroll working rules (IR35) for contractors working under IR35 legislation

Updated February 2020

Off-payroll working rules change on 6 April 2020 and, from this date, all public authorities and medium and large sized clients will be responsible for deciding the employment status of workers.

Public sector clients already have some rules applied, but medium and large-sized private sector clients, including third sector organisations, such as some charities, will also need to apply them.

Who are the rules for?

The rules apply to all public sector clients and private sector companies that meet 2 or more of the following conditions:

• you have an annual turnover of more than £10.2 million
• you have a balance sheet total of more than £5.1 million
• you have more than 50 employees

Balance sheet total means the total amounts shown as assets in the company’s balance sheet before deducting any liabilities.

You must apply the rules if you have an annual turnover of more than £10.2 million and are not:

• a company
• a limited liability partnership
• an unregistered company
• an overseas company

When do you start?

Public sector clients must continue to apply the current rules, although there are additional responsibilities that need to be considered.

Private sector clients must start to apply the rules, if the conditions are met, from 6 April 2020

The next steps
You’ll need to decide the employment status of a worker, you must do this for every contract you agree with an agency or worker. You’ll need to:

• pass your determination and the reasons for the determination to the worker and the person or organisation you contract with
• make sure you keep detailed records of your employment status determinations, including the reasons for the determination and fees paid
• have processes in place to deal with any disagreements that arise from your determination

Small-sized clients in the private sector will not have to decide the employment status of their workers - this will remain the responsibility of the worker’s intermediary. You must take reasonable care when making a determination about the employment status of a worker and failure to do so will result in the worker’s tax and National Insurance contributions becoming your responsibility.

Who to tell about your determination
From 6 April 2020, you must provide the worker and the agency, or other organisation you contract with, your determination. Do this whether your determination shows that the off-payroll working rules will apply or not, and you must provide reasons.

If you would like us to take the headache out of ensuring your compliant with the changes to IR35 regulations, call us on 01932 22 55 33 or email us at info@jisaccounts.co.uk