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HMRC updates IR35 guidance ahead of Spring Budget
by Susie Hughes at 10:50 08/03/23 (News on IR35)
HMRC has issued multiple updates to the off-payroll working guidance section (IR35) ahead of next week's Spring Budget.
These include changes to what is classed as a ‘deemed employer’ focusing on the responsibilities on an employer if the off-payroll working rules apply.

Russell Upton from umbrella group, Parasol, said:“There have been whisperings that IR35 may come up at next week’s Spring Statement but instead, HMRC have moved more quickly and slipped out an update to the guidance around IR35.

“One of the most notable things for me is the section on what constitutes a deemed employer. This is the qualifying person at the lowest point in the labour supply chain in possession of the status determination statement (SDS). You cannot be the deemed employer until you have received the SDS, unless you are the client.

“The responsibilities of a deemed employer are onerous. They are responsible for paying the relevant tax for the deemed employee if they have received a SDS from the client that the contractor is inside IR35. They are not allowed to deduct the employer's taxes from the contractor's employment income. So, unless they have made arrangements with the client, they will end up footing the bill themselves.

“Plus, if the client has given a determination that the contractor is outside IR35 and HMRC successfully challenges it, it will be the feepayer, as the 'deemed employer' who will be liable for paying the backdated tax. So, as long as the client has taken reasonable care, despite the fact that the feepayer has no part in the decision-making, it is they who will end up with a bill for tax. This is without doubt the worst part of the legislation in my opinion, adding yet more complexity to a set of rules that are already widely misunderstood by many businesses and individuals.”

The updated guidance is available on the Government's website here.

Further IR35 information
For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section.

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