The Freelancer & Contractor Services Association (FCSA) has welcomed the amendments made to the reform of IR35 in the public sector published in the Finance Bill yesterday and is pleased that HMRC has listened to the trade association’s requests during the consultation period.
Reviewing the amendments:
- FCSA is pleased that the MSC legislation carve out means that intermediaries can process contractor’s payments operating PAYE and NICs under Chapter 10 which means that MSC legislation will not apply and so there will be no transfer of debt provisions. This change enables those experts who provide this invaluable payment processing service to continue doing so.
- FCSA is pleased that the public authority hirer is required to provide IR35 determination much earlier than the originally planned 31 days and if it fails to do so, or indeed fails to take reasonable care in deducing IR35, it will become the feepayer and be responsible for operating PAYE and NICs for assignments within IR35.
- HMRC has also imposed a new duty for a contractor to provide information to the feepayer regarding their set up and whether IR35 applies to their company. Without such information HMRC will assume that conditions of liability do apply – this is a logical development in support of enabling hirers and feepayers to properly assess whether IR35 is applicable.
Commenting on the changes, Julia Kermode, FCSA’s chief executive said: “The changes appear to be positive and we are pleased that HMRC has listened to FCSA’s concerns and made appropriate amendments to the Bill. It will be interesting to see how the new legislation works in practice, particularly on the onus of the public sector hirer taking reasonable care when it comes to determining status and if any public sector bodies will become the feepayer in reality. Notwithstanding, this provision is good news overall as it should avoid ‘wholesale’ approaches of hirers deeming all contractors to be inside IR35
“April 6th is only a matter of weeks away and the impact of the legislation is still going to be significant. I would like to remind HMRC that none of these IR35 changes would have been necessary if HMRC had enforced the original IR35 legislation over the last 17 years.”