Off-Payroll Working Changes (IR35)

There have been several enquiries to the Helpdesk recently regarding the changes to off-payroll working, sometimes known as IR 35, and whether they will affect the way many golf clubs retain their Professional. The changes will come into force on 6th April 2020 but there is an exemption for small businesses (see below) which will allow most clubs to continue as before. The off-payroll working rules can apply if a worker provides their services through an intermediary. An intermediary will usually be the worker’s own personal service company (PSC). They could also be a partnership, a managed service company, or an individual. The rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees. If the rules apply, tax and National Insurance contributions must be deducted from fees and paid to HMRC. The rules apply if a worker provides their services to a client through an intermediary but would be classed as an employee if they were contracted directly. You can use the Check employment status for tax service to help decide if the off-payroll working rules apply. On 6 April 2020 how the rules are applied will change as follows: - All public sector authorities and medium and large-sized private sector clients will be responsible for deciding if the rules apply. If a worker provides services to a small client in the private sector, the worker’s intermediary will remain responsible for deciding the worker’s employment status and if the rules apply. The legislation applies only to ‘medium or large’ businesses. There’s an exemption for end-clients who are ‘small businesses’ as defined by the Companies Act 2006 which means meeting two or more of the following criteria: Annual turnover is no more than £10.2 million Balance sheet total is no more than £5.1 million No more than 50 employees. Where the end-client meets two or more of these criteria, responsibility for determining the IR35 status of a contract remains with the PSC and the changes do not apply.  The government has included clauses in the legislation to ensure medium or large businesses do not set-up arm’s length companies or subsidiaries to procure services from PSCs. The legislation will apply to the parent company based on the aggregate amount of turnover and the aggregate amount of the balance sheet total of the connected entities.
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