Activate Payslips Payslip login | Support: 0333 666 1510 Payroll: 0845 520 1500 Client Services Worker Services About Us Contact Us Sign Up Private sector contractors and IR35 We are just under 6 months away from the 2020 tax year starting, and with it the extension of the IR35 legislation to include contractors in the private sector. From July, when the draft legislation was published, the estimation was that around 180,000 individuals working through their own personal service company (PSC) could be affected, in addition to around 60,000 businesses who engage contractors using such models. so what's happening? Since the draft was published, hirers have been coming to terms with the changes and the unpopular ‘transfer of liabilities’, ‘transfer of debts' and perhaps least welcomed, 'self-policing' nature of the new rules. Whilst HMRC is no doubt delighted with the wording, there is little doubt that firms are nervous that they could be saddled with a tax liability from a PSC, and we are already seeing reports of large companies refusing to take on new contractors in 2020, potentially leaving businesses with higher costs or skill shortages. So what exactly is the big fear for hirers and other companies in the supply chain? In short, "debt transfer": The new legislation gives HMRC the power to collect unpaid PAYE from other parties in the supply chain. This already applies to all contracts in the public sector, and now engagements with medium and large companies in the private sector from April 2020.The regulations allow for recovery from a ‘relevant person’ of any amount that an officer of HMRC considers another person should have paid under PAYE regulations in respect of a deemed direct payment.This means that if the fee payer fails to pay the PAYE tax and NI liability, HMRC can simply collect the unpaid liability from other organisations in the supply chain. Who is affected? Individuals supplying their services through an intermediary, such as a PSC, and those who would be employees if engaged directly. This applies to all medium and large-sized organisations in the private sector that engage with individuals through PSCs, but also includes recruitment agencies and other intermediaries supplying staff through PSCs. The long-term results of the legislation can only be guessed at currently, but leading industry figures fear that blanket, one-size-fits-all ‘inside IR35’ rulings on PSCs will increasingly be the response from the very largest of hirers, and that this would lead to a domino effect where other businesses, to save time and protect themselves either follow with such blanket assessments ot simply refuse to engage limited company contractors due to the IR35 changes. Questions remain as to whether the affected contractors will be forced to become employed or have to use umbrella companies. FPS is not an employment intermediary, and we offer a PAYE payroll service that is outside of the scope of IR35. Whilst we know that may not be suitable for everyone, we can at least give you the comfort that all taxes and NICs are paid. Call our client services team on 0333 666 1510 to talk to an advisor today. Post not marked as liked Featured Posts Brexit. How it might affect your workforce. Living Wage update 2019 Can your payroll provider be trusted? Recent Posts Roadmap out of Lockdown Contractors and IR35 (updated) Private sector contractors and IR35 Brexit. How it might affect your workforce. Living Wage update 2019 Time to get re-acquainted Privacy policy updated FPS adds new pensions Budget Update - March 2017 A Merry Christmas from First Payroll Archive March 2021 (1) 1 post March 2020 (1) 1 post October 2019 (1) 1 post March 2019 (1) 1 post February 2019 (1) 1 post December 2018 (1) 1 post May 2018 (1) 1 post July 2017 (1) 1 post March 2017 (1) 1 post December 2016 (1) 1 post August 2016 (2) 2 posts July 2016 (1) 1 post June 2016 (1) 1 post May 2016 (1) 1 post April 2016 (1) 1 post March 2016 (3) 3 posts February 2016 (1) 1 post January 2016 (1) 1 post Search By Tags No tags yet. Follow Us Follow us: First Payroll STM Ltd 2nd Floor Dawson House 5 Jewry St Tower London EC3N 2EX Admin/Payroll Tel: 0845 520 1500 Support/Sales Tel: 0333 666 1510 General Enquiry Fax: 0845 520 1510 Contact First Payroll Services for companies Services for workers Our Services About First Payroll Sign up to use First Payroll Get payslips online FPS Perks Retirement Planning Privacy Policy Copyright © 2017-2021. First Payroll Services is a trading name of First Payroll STM Ltd, Registered in England No. 09758425 Calls to 0845 numbers will cost 0.07ppm plus your phone company’s access charge