Transferring IR35 liabilities

Transferring IR35 liabilities

The government have released a consultation on the secondary legislation they are proposing to implement with the new IR35 provisions. This looks at transferring liabilities to third parties.

The consultation can be found here

Anyone responsible for determining whether IR35 applies should read this consultation as it could have a significant impact for everyone in the supply chain.

When the government first consulted on amending IR35 in the private sector it was clear that they wanted to introduce additional provisions to encourage supply chains to be robust and compliant. This proposed secondary piece of legislation will help achieve this by enabling HMRC to push the liability to other parties where they believe there is no realistic prospect of recovering the money.

This ensures that if a client is offshore, the next party in the supply chain that is UK based will be responsible for determining IR35. It also means that if an intermediary is used, to pay the limited company contractors and they are not likely to be able pay any associated liability. HMRC can look up the chain to the end client for the PAYE and NI. This is a significant move for HMRC and end clients should ensure that their supply chain understands the legislation and will be compliant.

The best action is to consider IR35 for each contractor so that you know IR35 will not apply irrespective of who pays the contractors. Trinity Tax can assist with the review process to ensure IR35 is applied correctly.

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