IR35 changes: pitfalls and consequences

Readers will be aware that the long-delayed off-payroll working rules for the private sector will come into operation on 6 April of this year. For services provided to medium and large private companies on or after 6 April 2021 responsibility for PAYE and National Insurance will shift to the end user. Where services are provided to small companies there is no change to the existing rules. Large and medium sized companies will become responsible for establishing whether the contractor falls foul of the off-payroll rules. The client company will need to issue the personal service company (PSC) with a ‘status determination statement’ if the off-payroll rules apply. Thus the contractor will become a deemed employee for tax purposes and the client company (or agency who pays the contractor fees) will be responsible for deducting income tax and employee’s NICs from the payment.

Why were these changes introduced?

It is...