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IR35: Scope of off-payroll rules changed from April 2020by
Only payments for services delivered from 6 April 2020 will be subject to the off-payroll rules in the private sector, which is a switch from the rules applying to payments made, irrespective of when the services were performed.
HMRC made this sensible announcement on 7 February 2020. Now engagers and contractors can make a clean break from Monday 6 April 2020, such that the work performed by contractors from that day onwards is reviewed by the engager for compatibility with the IR35 rules.
Where that contract is determined by the engager (end-client) to fall within IR35, the person in the hiring chain who has responsibility for paying the contractor must deduct income tax and employee’s NIC under PAYE from any payments made for those services.
Where the services are performed by the contractor before 6 April 2020 it will continue to be the responsibility of the contractor and his personal service company (PSC) to decide if the work falls within IR35 and pay the right amount of tax to HMRC.
As originally drafted the roll-out of the off-payroll rules was to apply to payments made to contractors on and after 6 April 2020, irrespective of when the work was performed. This would mean that work performed in February and March 2020 would be drawn into the off-payroll rules, as where the payment terms were 30 days or more, payment for those services would not be made until after 6 April 2020.
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