Yesterday it was confirmed that the government plans to go ahead with the implementation of IR35 in April 2020. This only leaves private sector businesses with nine months to prepare for IR35 tax rules. The intention is to ensure that two people working side by side in a similar role for the same employer pay the same employment taxes.
IR35 brings problems for both employers and contractors, and was introduced to tackle tax avoidance by contractors that were working within the public sector. From April 2020 the same rules will apply to private businesses, and will impact contractors, agencies supplying them, and hirers.
This will now affect companies that are now responsible for determining whether the contracts they hire fall within the scope of IR35 legislation, making them liable to pay a higher rate of tax. Private sector firms will also need to check whether contractors need to pay income tax and national insurance contributions, shifting the responsibility for conducting checks from the contractor to the organisation using their services.