How Contractors need to prepare for April 2023

As Contractors should now be aware, the government has announced its intention to  repeal the changes to off-payroll rules from 6 April 2023 as part of its drive to simplify the UK tax regime. For this to happen, the repeal of the legislation must be put before parliament and voted on, likely to be in a Finance Bill this autumn. Contractors should continue to read the Outside Spy blog for confirmation of this happening. In addition, contractors need to be aware of the current situation and think about preparing for post April 2023, by considering the following;

  • The announcement of repeal doesn’t change the existing IR35 situation for the current tax year, contractors should still be looking to engage on contracts assessed as “outside IR35” under the current provisions, up until April. Outside Spy is committed to continue to provide its service to identify all qualifying contracts advertised until that date.
  • All Contractors, particularly those that entered contracting under the existing tax regime, should familiarise themselves as much as possible with the IR35 provisions that will apply post April, as they will find that they now hold liability for their own tax status assessment.
  • Contractors who feel they may have been pushed into inside IR35 arrangements via umbrella companies under the current legislation, may be seeking a way back to operating via their own PSC. How clients will react to any request to do this, and how HMRC would view the prospect of contractors moving from an “inside” determination to an “outside” determination at the same client is currently unknown. Unless the position is clarified for them, we would not be surprised to see contractors in this position looking to start with new clients come April.
  • Contractors who took up an offer of permanent employment when the existing rules were introduced in the private sector in 2021, may now be considering re-joining the contract workforce. Making such a move with the same client (the so-called Friday-to-Monday scenario) would leave both the contractor and the client open to investigation under the continuing (and not to be repealed) IR35 provisions. Planning for such a change should therefore be given very careful consideration once the likely post April 2023 enforcement position becomes better known.
  • Contractors looking to start a new contract before April 2023 should still insist on receiving an appropriately drafted Status Determination Statement, as the existing regulations remain in force (and your tax status will potentially still be open to investigation after April 2023).


Footnote on Status Determination Statements:

It remains a possibility that Contractors, post April 2023, will be required to make their own formal IR35 assessment of each assignment (either by CEST or otherwise) and keep the results as part of their due diligence in assessing their own tax status. Opinions are currently divided as to whether or not this situation will come to pass, as it would likely require new or amended legislation to effect the change. It also remains a possibility that some engagers (clients) will continue to make formal IR35 assessments beyond April 2023 despite there being no legal requirement to do so, having put into place suitable assessment processes, and in order to protect their position against future investigations or future policy reversal.

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