IR35 reform repeal
The Chancellor of the Exchequer, Kwasi Kwarteng, announced during the mini budget that the 2017 and 2021 public sector and private sector reforms to the IR35 rules would be repealed from 6 April 2023.
At present where an individual contractor provides their services to an end-user through a private services company through a limited company. Currently it is the end-user who is responsible for determining whether the arrangement is inside or outside IR35 regulations. If it is determined that an individual is within the IR35 regulations then they are classed as an employee. In this case, the individual must be included on the payroll and taxed as an employee. If the individual is outside the IR35 regulations the fee payer will have liability for any shortfall in tax and NI owed to the Government.
It was announced that from 6 April 2023, the IR35 rules will return to their pre 2017 position, making the individual contractor once more responsible for determining IR35 status, and liable for any shortfall in tax and NI if the determination is incorrect. This will be widely welcomed by third party contractors and employers alike!