When the Government announced in March 2020 that they were postponing the Private Sector reform until April 2021 it all went a bit quiet. We take a look at where we are now, and what’s been happening as the April 2021 date approaches.
Will the Private Sector reform happen in April 2021?
It’s certainly looking that way. It was debated in the House of Commons, but MPs voted against delaying it any further. Whilst a House of Lords report highlighted some concerns around the legislation, the Commons vote certainly seems to cement its implementation from 6th April 2021.
Will COVID-19 impact implementation?
Whilst the global pandemic has had a significant impact on businesses, in particular Limited Company owners, it does not seem to have shifted the Government’s attention away from continuing with the April 2021 Private Sector reform.
What does this mean for PSCs?
Because plans were postponed for the Private Sector roll out, Personal Services Companies (PSCs) can currently continue to work for their clients without requiring a status determination. It’s worth remembering though that if initial conversations with the End Client were pointing towards an In Scope decision, that this is likely to be formally instated once 6th April 2021 arrives. It’s important for contractors to use this extension to identify any changes to working practices and contractual terms they could make to help demonstrate to HMRC that they operate off-payroll.
If contractors expect their working practices will accurately reflect an In Scope determination however, there are various options that they can consider for them to continue to engage with their End Client – find out more.
What does this mean for organisations?
For organisations required to make IR35 status determinations, the reprieve allows some time to review the approach previously taken and consider if this is the same strategy they would undertake if they had more time.
NRL’s sister company Linx provides a free IR35 Reflection and Readiness service to organisations who would like to take advance of the additional time to re-evaluate their IR35 strategy. To find out more about what’s included in this free service visit their website here.