The new Chancellor, Jeremy Hunt, has confirmed that planned changes to IR35 will not be going ahead. End users in the public sector and large and medium sized end users in the private sector will continue to be obliged to apply IR35 to any contractors providing their labour via their own intermediary, such as a personal services company or partnership (“PSC”).
IR35 is a tax anti-avoidance rule designed to combat “disguised employment”. IR35 applies when the contractor would be an employee (or officeholder) for tax purposes if they were hired directly by the end-user. If IR35 applies, PAYE and NICs must be operated in respect of the fees paid to the PSC.
Under the original IR35 rules, the contractor was responsible for assessing whether IR35 applied and, if so, operating PAYE/NICs. The rules were changed for the public sector from April 2017 and for large and medium-sized private sector businesses from April 2021. Under those changes, the responsibility for assessing whether IR35 applies moved from the contractor to the end-user. If the end-user determined that IR35 applies, the responsibility for operating PAYE and NICs moved from the PSC to the “fee payer” – that is, generally the entity which contracts directly with and pays the PSC.
The September 2022 mini-budget said that these changes would be reversed. The then Chancellor Kwasi Kwarteng...
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