Off-payroll working in the private sector

It was announced in the Autumn Statement 2018 that the changes to IR35 that came into effect in April 2017 for the public sector will be extended to the private sector from April 2020. Responsibility for operating the off-payroll rules will be transferred from the individual to the organisation, agency or third party engaging the worker. Only medium and large organisations will be subject to this change.

On 5th March 2019, HMRC published the consultation document ‘Off-payroll working rules from April 2020’. The consultation seeks to refine the operation of the off-payroll rules prior to implementation into the private sector from April 2020.


No groundbreaking changes were present in the consultation which will remain open to responses until 28th May 2019.

It appears that the reform will mirror that currently implemented in the public sector, with a few potential tweaks:

  • The rules will not apply to small businesses; HMRC have confirmed in more detail that a company will qualify as small where the company, in a year, satisfies two or more of the following requirements:
  • Annual turnover not more than £10.2 million
  • Balance sheet total not more than £5.1 million
  • Number of employees not more than 50

However, this may be of little consequence as the vast majority of contractors work for larger corporates where the requirements above are not met.

  • Sharing of information requirements; Clients will be required to pass information of the determination to the agency, as well as directly to the contractor, and include the reasoning for that determination on request. The information is then required to cascade down the labour supply chain to the fee-payer.

This will be welcomed by contractors looking for transparency over status decisions but may pose an increased administrative burden on clients.

  • Provision for the transfer of liability; HMRC has placed the onus for ensuring compliance with the rules on the first agency (i.e. the agency/intermediary closest in the labour supply chain to the client, which in most cases will also be the fee-payer). Providing that each party or parties in the chain fulfil their responsibilities, the liability will rest with the agency or intermediary closest to the client. This is even though this party will not be the one that has made the IR35 decision. Therefore, its vital recruiters ensure they are able to contribute to accurate assessments.
  • Introduction of a “client-led disagreement process”; HMRC proposes that clients have a process for dealing with status disagreements with its off-payroll workers. There will likely be minimum requirements to this such as the consideration of evidence put forward by the worker, however the organisations will be able to tailor the process to their business processes.

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