Following consultation over the summer, the Chancellor has announced the extension of the IR35 off-payroll rules to the private sector. Commenting on the announcement, legal director Cathy Bryant, said:
“The practical effect is that the company which ultimately benefits from the consultancy services provided through a private service company, must determine whether or not it is required to withhold PAYE and NIC on the fees charged by the personal services company. This requires the beneficiary company to investigate and assess whether or not the consultant delivering the services would, but for the agreement in place with the personal services company, be an employee. If the outcome of the assessment is in the affirmative, the beneficiary company must withhold PAYE and NICs on the consultancy fees.
“This is a very controversial move and is based on an equally controversial idea that individuals doing the same work (regardless of how they are employed or contracted) should pay the same tax. The implementation is delayed to April 2020 and is limited to large and medium sized companies.”