Paystream responds

Budget review to off-payroll

Paystream responds

UK & Europe

Yesterday the Chancellor announced that the off-payroll rules, which were introduced in the public sector last year, will be extended to the private sector with effect from April 2020.  This is following submissions from PayStream, the recruitment industry, ICAEW, CBI and many others that all suggested that the legislation should, at least, be delayed to assess the real impact the changes have had on the public sector.

Julian Ball, Legal Director at PayStream explains “The changes will mean that, from 2020, if the recruitment business does not correctly identify an assignment as inside IR35 and they continue to pay the PSC gross, they may be liable to pay PAYE and NI on the assignment income (over 30% of the gross paid) to HMRC if the assignment is found to be caught by IR35.”

“There are circumstances where this liability may be passed up the chain to a client (e.g. if the client has failed to assist (when asked to do so) in making an assessment) but the reality is that it is the recruitment business that will be on the hook in the vast majority of cases.”



When this was rolled out to the Public sector in April 2018 there was less time to prepare which meant:

  • Clients did not understand the changes (and these were big clients!). This led to blanket “caught” decisions which was bad news for everybody.
  • Payroll Software didn’t work with the new rules meaning that paying a PSC in accordance with the off payroll rules was not an option. This often meant a switch to umbrella or PAYE.
  • High street accountants didn’t understand the new rules and challenged deductions made as “wrong.” The unusual treatment around VAT also caused problems.

Julian Ball, Legal Director at PayStream says, “We predict that contractors will start to pay more attention to the IR35 status of an assignment and as April 2020 approaches will look for roles advertised outside IR35.  The good news for contractors and agencies using PayStream is that unlike many other accountancy practices, PayStream have an in-house IR35 team which can help your contractors better understand their IR35 status”

“Our advice to agencies is to spend the next 12 months working with clients to educate them about the coming changes and to start to consider the IR35 status of an assignment.”



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