The Government has now completed the review of the changes to the off-payroll working rules and has published a response.
Matt Fryer, Head of Legal Services at Brookson Group said:
“This is a welcome confirmation that the government is implementing a soft-landing for the first 12 months of the new off-payroll working rules. HMRC’s soft landing means no penalties, but it appears as though HMRC will still collect any unpaid taxes due from 6 April 2020. IR35 is a complex area of employment law so this period will help businesses and recruiters get the right processes in place to manage the changes.
“It’s important to note that HMRC will still be penalising businesses where there is evidence of deliberate non-compliance. This risk can travel up the supply chain, so businesses and recruiters must still be very careful who they engage with. If tax avoidance schemes posing as non-compliant umbrella firms are found to be in breach of the legislation are unable to pay penalties these can be passed onto the end-hirer.”
“It will be interesting now to see how HMRC manages challenges made by contractors who disagree with the assessments made by their end hirer. The legislation stipulates that this process must be managed by the business in question, but businesses will be looking to HMRC for guidance as they seek assurance of their compliance during this bedding in period.”
To read the off-payroll report and conclusions, click here.