HMRC has announced that it will be running additional workshops for construction firms to help the sector prepare for the impending changes to the IR35 tax rules.
The IR35 legislation changes were originally set to come into effect from April 2020, but due to the coronavirus pandemic, this plan was postponed – along with several others such as the VAT reverse charge – until April 2021.
Four 90-minute virtual workshops were originally scheduled throughout January to support medium and large businesses in the run-up to the rule changes. After these sessions were booked up within the first 24 hours, more workshops are now planned with dates to be confirmed shortly.
So what is IR35 and how does it affect me?
Starting from 6th April 2021, the government is changing their criteria regarding which businesses have to use the “off-payroll rules”, which are commonly referred to as IR35 rules.
Official guidance published on the HMRC website states:
“Off-payroll working rules
How the off-payroll working rules are applied will change on 6 April 2021.
Before 6 April 2021, if your worker provides services to a client through you:
- In the public sector, the client must decide your worker’s employment status
- In the private sector, you must decide your worker’s status
From 6 April 2021, all public sector clients and medium or large-sized private sector clients will be responsible for deciding your worker’s employment status. This includes some charities and third sector organisations.
If the off-payroll working rules apply, your worker’s fees will be subject to tax and National Insurance contributions.”
Essentially, the rules determine whether the worker’s tax contributions are paid for by the limited company they work for or the end client who is receiving the services. It’s now necessary for private-sector workers to establish whether their work activities fall within IR35 or not.
As a result, this could potentially impact many areas of your business if the rule changes apply to you. HR, payroll, and other areas of the business may need to be involved. Whatever you do, communication and coordination are essential.
How can you be sure whether the rules do apply to your business? Well, what the government classes as “medium and large” is any business with a turnover of more than £10.1 million, a balance sheet over £5.1 million, and employing more than 50 workers.
If you’re still not sure about the effect of the rule change on your business, you might want to look into signing up for one of the workshops being offered.
What are the workshop sessions about?
The workshop sessions are intended to give attendees a deeper understanding of the legislation changes coming in from April 2021. This is vital to ensure compliance with the relevant rules and avoid fines or tax investigations further down the line.
According to the HMRC Off-Payroll Team’s event page, you can expect the interactive online sessions to cover the following areas in detail:
- Which engagements are subject to the new rules
- Status Determination Statements
- The process for client-led disagreement handling
- Debt provision recovery
- Interaction with CIS
- VAT reverse charge (which you can also find more information on here)
If you still want a deeper understanding of the changes coming in, the best course of action would be to keep an eye on the page linked above, as more workshop dates are expected to be announced soon.