The changes are likely to be introduced into the private sector in April 2020, with the new rules being similar to those already in place in the public sector.
The main change is that the ‘end user’ will be responsible for the decision as to whether a contractor working for them is in or out of IR35 (previously the onus was on the individual contractor).
It is hoped that the consultation will help individuals and organisations prepare for the changes, as well as to provide them with an opportunity to add their comments. There has been considerable controversy since the rule changes were announced, as well as differing views on how successful (or otherwise) the rule changes have been within the public sector.
HMRC says the consultation is designed to ensure the proposed changes are suitable for the large and diverse private sector. It will also look to make sure those within the public sector will follow any additional rules laid out in the reforms.
Some contractors have already decided to close down their Personal Service Company (PSC) as a result of the changes – as they can’t be bothered with the additional hassle.
Accounting experts are saying that the effect of these changes could result in a sharp increase in the number of consultants becoming employees of the ‘end user’, as opposed to contracting with them. (This happened following the changes in the public sector.)
These contractors will no longer need their PSC. So, they will be looking for the best way to close down their company and take the money / assets out in the most tax-efficient way.
What should you do now?
This is yet another area of uncertainty which companies (both the end users and the contracting companies) could well do without, along with all the uncertainties and confusion surrounding issues like Making Tax Digital and (of course) Brexit.
Most experts in the Accountant profession seem to think that the IR35 changes will be coming into effect in April 2020, irrespective of the feedback given to the consultation paper.
If you want to know more about how these changes might affect you, speak to your Accountant as they will be able to advise you.
And, if you are looking to close your company using the tax-efficient liquidation process, we will be able to help you with our (nationwide) “£995 MVL service”.
For more details, contact us now on 0161 907 4044 or [email protected]