Yesterday we reported that, against the backdrop of the challenges posed by the Coronavirus (COVID-19), the Government has announced that implementation of the new IR35 off payroll working rules, which are to apply to large and medium sized businesses in the private sector, are to be delayed from 6 April 2020 until 6 April 2021. The Government has been clear that this is a deferral and not a cancellation.
We had hoped that we would receive further details on the draft legislation today, but the relevant provisions have not been included in the Finance Bill, which was published earlier today. We expect the provisions to be published into the Finance Bill over the coming days and will report further then.
However, in the meantime, HMRC has confirmed that the equivalent changes for the existing off payroll rules in the public sector are also to be deferred to 6 April 2021. HMRC has also confirmed that, in light of the delay, it will be pausing the customer support and education programme it had been delivering regarding the changes, but that this will resume at an appropriate time, prior to April 2021.
As we noted yesterday, in principle many businesses (and contractors) will welcome this delay, not least as it defers potential additional costs and provides breathing space if there are wider strategic workforce matters which need to be addressed. However, it also gives rise to a number of questions for businesses to consider over the next 12 months, depending on how far their implementation of the rules has progressed, policy decisions which have been made, and/or what they may need to communicate to the contractor population. Indeed some clients had virtually completed their plans around the IR35 changes and will likely push ahead in spite of the deferral.