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IR35 postponed to 2021 - an update from Caspian One

07.04.2020
In a world without COVID-19, on Monday we would've seen the release of a tax reform in the Private sector, known as IR35 - the off-payroll working rules.

As of April 6th, responsibility for determining the tax status of engaged contractors would have shifted to end-clients, requiring them to decide on either an Inside or Outside IR35 state. This, however, did not happen.

Instead on March 18th 2020 Steve Barclay, Chief Secretary to the Treasury declared the following in the House of Commons;

"I can this evening announce the government is postponing the reforms to the off-payroll, IR35, from April 2020 to April 6th, 2021."

Mr Barclay continued to highlight that;

"This is a deferral, not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay the same tax as those employed directly." 

Speaking with clients, freelancers and partners - we've found the news to be generally well-received. Most companies and contractors are delighted to have a further 12 months to iron-out their IR35 intentions; whether they were ready or not for 2020's original launch. However, some are less than happy, including contractors that have already gone through the determination process.

Concerning our markets specifically, we've heard from several clients that either:

a) They are reverting to freelancers making the determination and plan on pushing ahead with projects before the new IR35 implementation date - to maximise the use of a flexible workforce. Of course, COVID-19 has dented this significantly.

Or,

b) They are sticking with their determinations regardless of the legislation, as it's taken a great deal of effort to reach these decisions. They had also lost several freelancers as a result of earlier processes - likely the ones who were found Inside IR35.

This change of plans has raised many questions with our contractors. Many of these are best answered by our IR35 expert partners Qdos Contractor in their article at LINK. See the slides below for a brief FAQ.



“While the Government's postponement of the IR35 legislation was seen as a welcome announcement by the industry, the added pressure of the COVID-19 outbreak is eating into the time available to better prepare and react, and as a result, the revised implementation date will appear much sooner than expected.

The CPC service from Caspian One provides a flexible workforce through defined outcomes and milestones and is outside of the proposed legislation changes. Adopting a more clearly defined engagement model such as CPC ensures the provider has a responsibility to deliver and financial penalties if there are delays."

- Mike Elson, Director of Consultancy Services at Caspian One



During this pandemic period, Caspian One are continuing to work at full capacity, from remote locations. Cloud technologies, robust infrastructure and comprehensive operational planning initiatives have ensured our consultants can operate 'as normal' - with the ability to deliver clearly defined parcels of work, from isolation.

For full details of our Outside IR35 business model for outcome-led projects, visit projects.caspianone.com or contact projects@caspianone.com / +44 (0) 203 691 9168

Alternatively, for advice on hiring from home and more info on Caspian One's current status, download our latest guide > How to continue hiring & onboarding new employees when working from home?


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