Starting this week, new off-payroll working rules (IR35) come into effect.
The new rules move the requirement to assess the individual’s employment status from the Personal Service Company (PSC) to their end client in the labour supply chain.
The changes were first due to come into force in April 2020 but were pushed-back due to the coronavirus outbreak.
Large businesses are now required to check the employment status of anyone working for them indirectly through a personal limited company using an online test known as CEST. Many companies using PSCs will find that they must tax the PSCs as employees and pay PSC fees after deduction of PAYE and national insurance.
If the same individual has been providing services under the same contract conditions in previous tax years, HMRC could use Discovery Assessment Rules to claim tax for previous years.
Watch an ECA webinar on IR35 by industry expert Liz Bridge, delivered in March 2021: