IR35 rules are changing on 6th April 2021
Non-compliance could result in breaching the Corporate Criminal Offence legislation
IR35 rules (off-payroll working) will be changing from 6th April 2021. The new rules will see a shift in responsibility when determining the employment status of contractors. Under the new rules, it will now be the employer’s responsibility to assess the employment of the contractor, which will determine how they should be taxed.
These changes are part of a long-running tax avoidance clampdown by HMRC, which is designed to discourage contractors from deliberately minimising their employment tax liabilities.
A contractor’s tax status is determined based on the work they do and how they do it. Employers must now determine if contractors should be taxed in the same way as their employees (inside IR35) or as off-payroll workers (outside IR35).
HMRC’s guidance states that organisations should take ‘reasonable care’ when individually assessing the tax status of contractors they engage with.
It is important to note that deliberate non-compliance with the new IR35 rules could result in breaching the Corporate Criminal Offence (CCO) legislation.
If a corporate entity engages the services of an individual through a service company and both the representative of the corporate and the individual engaged have deliberately misrepresented their employment status under IR35, HMRC has indicated that the corporate may be within the scope of the Corporate Criminal Offence.
Where the employer is found to have committed an offence under the Corporation Criminal Offence legislation, they would be subject to sanctions such as unlimited fines, deferred prosecution orders and serious damage to reputation, as the company’s actions will be made public record.
At STS (Europe) we offer training courses for senior management and all other relevant employees to make sure that staff are aware of the legislation and inform them on how to follow best practice.
Our training course is an essential part in creating a defence against CCO.
If your company does not have CCO training in place, then get in touch with us.
Call us on 01704 891676
Email us at email@example.com
Send us a message via our contact page
You can also visit our Corporate Criminal Offence page for more information.
This guide is an informative piece and does not constitute tax advice for individual matters.