Today (11/07/19) the Government has issued draft legislation for the Finance Bill 2019-20, including plans for off-payroll reform to be rolled out to the private sector from April 2020. Some of the salient points are:
- End-clients will be responsible for determining IR35 status of assignments for the PSCs that they engage.
- The policy note states that there will be savings for PSCs who will no longer have to do their own IR35 determinations.
- They also state that PSCs will be better off as they won’t incur accountancy fees either (!)
- There will be a statutory client led status disagreement process (placing significant unfair burden on clients).
- They also state that they don’t expect any significant economic impacts – FCSA research indicates that 13% of PSCs will quit, equivalent to a loss of some 78k individuals.
- There will be a small businesses exemption as per sections 382 and 383 of the Companies Act 2006.
- Clients will have a duty of reasonable care, so a status determination statement will not count of the client has failed to take reasonable care.
Commenting on the developments, FCSA’s Chief Executive Julia Kermode said:
“In spite of all the warnings about the disastrous impact that the Off-Payroll reforms have had in the public sector today we have had confirmation thatthe government will be extending the off-payroll rules to the private sector come April 2020. However, I am enraged and shocked to read that they will be introducing a statutory client led status disagreement process which will place significant unfair burden on clients.
“What’s more the policy note states that PSCs will be better off as they will no longer have to manage their own status determinations or incur accountancy fees either. However what they neglect to state is the significant number of PSCs that will be worse off due to being unfairly taxed if their IR35 determination is incorrect, and the fact that any PSC that has a mix of inside and outside IR35 determinations during a financial year is actually more likely to need an accountant to work out their true tax position! We know from our lobbying activities that Government and policymakers do not understand our sector or fully appreciate the implications of their policy decisions and today’s draft bill confirms this.
“They also state that they don’t expect any significant economic impact as a result of rolling out the new reforms but FCSA has recently conducted research that 13% of PSCs will quit contracting. They claim to have listened to stakeholders concerns but today’s bill simply highlights that they have simply paid lip service to listening. The reforms will be devastating for the UK economy and I would urge our next new Prime Minister to take a sensible look and a sensible view before pressing ahead with these damaging proposals. The UK is in a delicate state right now and these reforms will do little to alleviate the UK’s problems.”