IR35

Under the OPW rules, where IR35 applies, payments to the PSC must be processed via payroll subject to PAYE, NIC, and (where appropriate) Apprenticeship Levy.

Should you therefore retain the rigour of your OPW identification procedures (and technology) to manage this risk?; and So how effective will HMRC’s enforcement of IR35 at the PSC level be from 6 April 2023? You might need to keep this under review and be prepared to adapt. direct engagement rather than through a PSC), the payroll risks sit with you – regardless of the repeal of the OPW rules. If other organisations are prepared to be more flexible in how they engage contingent talent, you might be at a competitive disadvantage. [responsible for determining whether IR35 applies and paying the correct tax and NIC](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1105989/CCS207_CCS0822746402-001_SECURE_HMT_Autumn_Statement_2022_BOOK_Web_Accessible.pdf), but HMRC have also said they will keep compliance “ [closely under review](https://www.gov.uk/government/speeches/the-growth-plan-2022-speech#:~:text=closely%20under%20review.)” and it is presently unclear to what extent this may involve end-clients. the Corporate Criminal Offence (CCO) of facilitating tax evasion) mean that, for public sector and large or medium sized businesses, the repeal of the OPW rules does not necessarily signal a return to previous ways of engaging talent. But your tax obligations will change from 6 April 2023 when the OPW rules are repealed. What steps should you take to ensure compliance and how will you enforce this?; and Generally, PAYE determinations can be made for up to four years, or six years in cases of ‘carelessness’, from the end of the relevant tax year (e.g. How could you demonstrate to stakeholders that any savings you realise are fair, i.e. Under the OPW rules, where IR35 applies, payments to the PSC must be processed via payroll subject to PAYE, NIC, and (where appropriate) Apprenticeship Levy.

The UK government's reversal of its decision to repeal changes to the IR35 rules will deal “a major blow to freelancers and contractors”

“There is little fat to be cut from public services and other cuts would put at risk the government’s vital investment in growth. Alongside this, the liability shifted from the contractor to the fee-paying party (often the recruiter) in the supply chain. The value of the pound dipped to an all-time low against the dollar three days after Kwarteng’s statement. IR35 reform damages the flexibility of the UK labour market, which is key to economic growth.” IR35 reform in the public sector introduced in 2017 saw public sector bodies become responsible for determining the IR35 status of contractors – the responsibility shifted from the contractor to the end client. As part of the UK government’s ‘Growth Plan’ outlined in September’s mini-Budget, the government had planned to reverse the 2017 and 2021 changes to the off-payroll working rules (IR35) in an effort to simplify the UK tax system.

Among the changes Mr Hunt made to Mr Kwarteng's plan is to reverse the repealing of IR35 off-payroll working rules. But, what exactly are the IR35 reforms ...

[Jeremy Hunt](/topic/jeremy-hunt) was announced as his successor, with the new Chancellor of the Exchequer issuing an emergency statement on October 17. [Truss](https://www.standard.co.uk/topic/liz-truss) to U-turn on a number of financial plans and [ letting go of Mr Kwarteng](https://www.standard.co.uk/news/politics/kwasi-kwarteng-sacked-chancellor-liz-truss-tax-press-conference-b1032759.html). [Chancellor ](https://www.standard.co.uk/topic/chancellor)of the Exchequer, who was fired from the position on October 14, had explained his plan to address the complexity of the tax system and thought it necessary to repeal the 2017 and the 2021 off-payroll working rules known as the IR35 reforms. [Jeremy Hunt](https://www.standard.co.uk/topic/jeremy-hunt) has [scrapped the IR35 reform repeal](https://www.standard.co.uk/news/politics/chancellor-jeremy-hunt-mini-budget-kwasi-plans-tax-energy-liz-truss-b1033181.html) that was planned by his predecessor [Kwasi Kwarteng](https://www.standard.co.uk/topic/kwasi-kwarteng). [national insurance](https://www.standard.co.uk/topic/national-insurance) and [income tax](https://www.standard.co.uk/topic/income-tax) contributions as the employees who directly work for the client. The new chancellor has scrapped the repeal of the IR35 reforms

Westminster is being told it must do more to support the “entire flexible labour market” after dropping plans to repeal IR35 tax rules.

In the meantime, hirers, recruiters and their supply chains must ensure they are complaint with the rules currently in place. The IMF and markets have strongly indicated that the Treasury must rebalance the books through taxation, so HMRC will be proactively seeking to recoup tax liabilities in the years to come.” However, it is clear now that the Government acknowledges the current rules aren’t working as expected. At least retaining the current off payroll working rules takes us back to the position we were in a few weeks ago and gives us a bit of certainty. The indicators have been there over the past few days. The main thing now is clarity moving forward.

Experts have warned of further turbulence to come following Jeremy Hunt's announcement that the proposed repeal of IR35 reform and income and dividend tax ...

That should include dealing with one of the major issues with IR35 – the complex test for determining whether someone should be an employee or self-employed.” She said: “In the longer term, IR35 still doesn’t work properly and needs to be heavily reformed. And yet they still claim they are pro-growth. And yet they decided to keep it. “It would be good to see the Treasury take this opportunity to undertake a comprehensive review of the IR35 rules and commit to real reform. “Out of all the tax changes announced in the mini-budget, in my opinion, the plan to repeal IR35 reform was the least controversial – it was logical, fair and would even help generate revenue for the Treasury.”