The Association of Independent Professionals and the Self-Employed has said UK government guidance on private sector changes to off-payroll working falls "woefully short".
From 6 April 2020, it will be the responsibility of all medium and large-sized private sector bodies to determine whether contractors fall within the IR35 legislation. The move will affect a significant number of IT contractors.
The measure is expected to envelope 170,000 individuals currently working for their own company, said the government. The Treasury estimates the move will boost its coffers by £3.1bn between 2020 and 2024.
Last month the Treasury published draft legislation on the plans.
If the off-payroll working rules apply, workers' fees will be subject to tax and National Insurance contributions but they will not receive other benefits of workers on the payroll, namely holiday or sick pay. The rules only apply to companies with a turnover of £10m and more than 50 employees.
The guidance advises companies to:
- Decide the employment status of a worker
- Do this for every contract you agree with an agency or worker
- Pass your determination and the reasons for the determination to the worker and the person or organisation you contract with
- Make sure you keep detailed records of your employment status determinations, including the reasons for the determination and fees paid
- Have processes in place to deal with any disputes that arise from your determination
However, industry bodies have previously called on the government to delay its plans to extend the much-hated anti-tax avoidance law IR35 from the public to the private sector.
The April 2020 rollout doesn't allow businesses adequate time to prepare, industy folk have said.
Andy Chamberlain, deputy director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), said: "The government's guidance on the changes to IR35 next April falls woefully short.
"Not only does it not acknowledge how incredibly difficult it is to make accurate IR35 determinations; it also fails to offer guidance on how to do so.
"Fundamentally, however, this is not really about the guidance. The changes to IR35 were a disaster in the public sector, and they will be even worse in the private sector. No amount of guidance can change that, and we urge the government to delay and rethink these reforms." ®