From 6 April 20021 further changes to IR35 rules will come into force. These will impact individuals operating through personal service companies (PSC) and, the large and medium-sized private-sector organisations that hire them.
Originally introduced back in 2000 the government sought through IR 35 to tax someone working through a personal service company (PSC), to similar levels of tax paid by equivalent employees.
HMRC has had difficulty enforcing IR35.
The government started to reform the rules with the public sector from April 2017. They did this by shifting the responsibility for determining employment status from the individual contractor to the organisation engaging them.
Now the responsibility falls on medium and large organisations in the private sector.
AS a result, individual’s operating through PSC’s face a significant reduction in their income.
In this Active Practice Update we consider:
- Who does this affect the most?
- Key employment indicators to be considered including:
- Mutuality of obligation
- Other common indicators
- Checking employment status using the enhanced CEST tool
- Expenses allowance – what is allowed?
- Penalties – ‘light touch’ approach for 12 months
- Options – should you be looking to become a permanent employee?
For more information call 01772 741200