HMRC have confirmed that, the current IR35 Off-Payroll Rules for the Public Sector, introduced in April 2017, will continue to operate as they did in the previous three tax years, despite the postponement of the extension of the rules into the Private Sector.
In addition, the planned changes to the IR35 Off Payroll Rules that were planned for April 2020 that will bring in additional responsibilities for Public Sector will, in the main, be postponed. HMRC have therefore confirmed that for the 2020-2021 tax year, Public Sector will not be required to:
- Produce a status determination statement (SDS) and pass it to the worker and the first party in the contractual chain, or:
- Have a status disagreement/appeal process in place.
These requirements will take effect from 6 April 2021.
However, there is one change that HMRC has confirmed will be an additional requirement for the Public Sector, or agencies providing workers to Public Sector, in respect of contracts which fall inside the IR35 Off Payroll Rules.
From 11 May 2020 onwards, the business paying the IR35 worker’s company will be required to start using the PAYE RTI “off-payroll worker subject to the rules” indicator which should have been added to all pay-rolling software from April 2020. There is no requirement to start using the Off-Payroll worker indicator on RTI submissions between 6 April 2020 and 11 May 2020, but, as this function will be available it can be used in respect of all payments from the 6 April onwards.
If you have any questions in respect of this, or any other Employment Tax issue, please contact Laura Parr or Mick Verney in the Employment Tax Team.
