IR35 review findings ‘Step in right direction’, says AAT

Although there won’t be a delay in the implementation of IR35, a number of changes have been announced by the government.

A communications programme to better explain how the rules will operate in practice has also been launched.

The key changes are:

• Customers will not have to pay penalties for inaccuracies relating to the off-payroll working rules in the first 12 months unless there is evidence of deliberate non-compliance.
• HMRC will amend the legislation to exclude wholly overseas organisations with no UK presence from having to consider the off-payroll working rules.
• The government will legislate to place a legal obligation on clients to respond to a request for information about their size from an agency or worker.

The AAT has welcomed the changes, not least because the promise of a “soft landing” was a proposal put forward by the organisation.

Brian Palmer, AAT Tax Policy Adviser, commented, “With the government having already previously postponed the extension of off-payroll working to the public sector and with just weeks remaining until implementation, AAT believed that further delay had little realistic chance of being delivered. We’re therefore pleased that the government has instead confirmed that there will be a soft landing period until April 2021.

“This means that if employers or contractors have taken reasonable steps to comply but get something wrong, HMRC will not be pursuing them with fines and penalties, which should provide some much needed reassurance.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.