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Lessons from implementing IR35 reforms


Lessons from implementing IR35 reforms

“Off-payroll working” - known as ‘IR35’ - tax rules can apply if a worker or “contractor” provides their services to the client through their own limited company or another type of intermediary.

The rules aim to make sure that workers who would be classed as an employee if they were providing their services directly to the client pay broadly the same Income Tax and National Insurance contributions as employees.

From April 2017, public bodies became responsible for determining whether IR35 applied to contractors providing services through an intermediary, where previously the intermediary or contractor was responsible.

This reform was prompted by perceived persistent non-compliance which HM Revenue & Customs (HMRC) estimated cost the exchequer £440 million a year in lost tax revenue. From April 2021, these new requirements were extended to medium and large organisations in the private and third sectors.

The Committee has previously reported on concerns that some people who had complied correctly with the IR35 rules had missed out on Covid support for those still classified for tax purposes as “self-employed”.

With the reforms now taking effect in more sectors, the Committee will question senior officials at HMRC on what lessons have been learned from the public sector implementation of the IR35 reforms.

If you have evidence on these issues please submit it here by Monday 14 February 2022 18:00.