IR35: Planning for April 2020 – should I stay or should I go? IR35: Planning for April 2020 – should I stay or should I go?
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  1. #1

    Some things in Moderation

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    Default IR35: Planning for April 2020 – should I stay or should I go?

    So, it’s (nearly!) October 2019 and if you haven’t already, now is the time to start planning for the IR35 changes in April 2020.


    Just to be clear – IR35 itself isn’t changing; the change is who decides whether your role is inside or outside of IR35. It is the client who decides that, not you (or your contract reviewer).

    First, here are the new rules from the Horse’s Mouth. Read them:
    Understanding off-payroll working (IR35) - GOV.UK
    April 2020 changes to off-payroll working for clients - GOV.UK


    Awareness, not guidance

    In this thread I am NOT going to tell you what to do. Your decision comes down to your attitude to risk. If you think it’s unlikely that HMRC are going to start looking closely at your tax position in the future, then you don’t really need to do anything.

    But if you feel uneasy about this, maybe it’s time to take stock and decide what you are going to do.


    What is the problem?

    There is no problem if your outside IR35 contract ends before April 2020. It was reviewed and your working practices show that the outside review was a valid one.


    The problem as I see it is if you are currently in an outside IR35 contract but your client decides that your role will be inside IR35 at your next extension or after 6th April 2020. HMRC may look at the months before the switch: “if you are inside IR35 now, you should have been inside IR35 then”.

    There is evidence that this happened in the public sector when things changed for them
    IR35 inspectors to probe public PSCs retrospectively


    What can I do?

    Basically, if you think that your client is going to decide that you are inside IR35, you need to consider whether to leave that client:

    • BEFORE 31st December 2019 (or you client's assessment date)
    • or 24th February 2020 (monthly payment), if your client hasn't said anything to you about assessments
    • or 24th March (weekly payment), if your client hasn't said anything to you about assessments
    • or not bothering at all and sailing through 6th April 2020.

    It’s all about your appetite for risk.


    If you do decide to leave, there must be enough time for your last invoice payment date to fall before 6th April 2020.

    Because as HMRC says:
    If you [the client] use the simplified test to determine your size, you must apply the rules from the start of the tax year following the end of the calendar year when you met the conditions.
    (The 'simplified test' defines the size of the companies affected by the changes - annual turnover of more than £10.2 million, see the website for details).


    But there’s more to consider…

    December 31st comes from some people thinking that you will have been assessed between Jan and March, but my date would have been around the middle/end of Feb (or middle of March if weekly), depending on timesheet submission.



    We need to remember that none of this is definite, but I’ve been around long enough to have a fair idea where this is all going, hence this thread.


    I don't know that this is actually going to happen, or when it might happen. I make my own determination of the situation based on previous observation of HMRC's ethics, methods and tactics, and the risk that they will be applied in the future with regard to the new world of IR35.

    If people ARE in business on their own account, they should be familiar with calculating risk versus reward and determine their own manner of mitigation in light of being informed of the possibilities.

    Basically - contractors are big and ugly enough to decide for themselves once they have the information.

    It's called making an informed decision.

  2. #2

    Some things in Moderation

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    Default

    Since people are missing this in the Accounting/Legal forum, I've placed a copy here...

    Thread closed. If you want to comment, comment over there.

    https://www.contractoruk.com/forums/...ould-i-go.html

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