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IR35: Off-Payroll Changes April 2021

The impending Off-Payroll Rules expected to come into force on the 6th April 2020 (subsequently postponed for one year to 6th April 2021) have caused concern and fear in the contracting sector. The volume of comment on the implications has been tremendous. However, there has been very little said on how these changes may affect clients, contractors, recruitment business and umbrella companies where there is an international element involved.

We draw your attention to HMRC’s statement on the matter:

Section 4.15

During the review concerns were raised about how the rules will apply where the client is overseas. The Government has listened to those concerns and will amend the legislation to exclude wholly overseas organisations with no UK presence from having to consider the off-payroll working rules. This means the existing rules for engagements outside the public sector will continue to apply to engagements where the client is wholly overseas, and the individual’s limited company will continue to determine the status of the individual.

From this, we can see that where the client is abroad, the determination of employment status will continue to be made by the PSC and not by the client or the recruitment business.

However, if there is a UK recruiter in the chain, then it is different. In this case, the UK recruiter is the fee payer and is responsible to carry our the Status Determination on the PSC.

The full text of the HMRC review is found here.

In conclusion, the contractor working remotely must make his CEST check on HMRC’s website to indicate whether they are likely to fall inside/outside IR35. However, HMRC will finally decide through investigation, should this arise and based on the case’s facts as seen in practice.