HMRC has updated its guidance notes, leading to rumours that the off-payroll rules will be applied to the private sector.
Many contractors fear that the off-payroll rules that apply to the public sector will also be introduced to the private sector. Its webpage, that has just been updated, used to contain information about IR35 in the private sector. The new information appears to imply that end-user companies could be caught by the April rules, thus sparking the rumours.
HMRC have denied that the changes herald any legislative change. A spokesperson for HMRC said, “if the client is in the private sector and the off-payroll working rules apply. Only IR35 applies across the public and private sector, but the new off-payroll rules require public bodies to operate PAYE.”
An ex-tax inspector agreed with HMRC, saying that “the private sector detail” was supposed to make it clear which framework applied to which sector.
A contractor hiring specialist has said that the government agrees, and is working on a fix. This would mean extending the off-payroll rules to the private sector so that there would be one system for all PSCs. Simon Bichara, who is the former boss of HiredByMe said, “I expect to see this in the private sector. A persistent rumour is that there is a team including contractors working on this in HMRC already.”
Mr. Bichara also warned that if the government does do this there will be a “limited opportunity” for PSCs and their clients to stop the changes going ahead.