A consultation released earlier this year looked at off-payroll working in the private sector. A number of possible options were put forward to tackle the perceived abuse of personal service companies (PSC), commonly known as the IR35 rules.
The cynics amongst us, however, believed that this was all a formality and it was inevitable that the government would favour a mirror of the new public sector rules. It was, therefore, not much of a surprise when the Chancellor did indeed announce at the Budget that this was the route to be taken.
The IR35 rules work by determining whether the individual operating through a PSC would be regarded as an employee if directly engaged. Under rules to be introduced from April 2020, the onus will be shifted from the PSC to the private sector company to determine whether IR35 applies.
The private sector business will then be required to deduct PAYE and NIC from payments made to the PSC, if they deem appropriate.
There will be some reprieve for smaller private sector entities, who will not be within the scope of the new rules, but further detail is awaited to confirm the limits that will be applied for this.