If you receive an inside IR35 or borderline assessment, we strongly advise you to take action as soon
as possible. This could include getting a more detailed review of your contract and working practices.
The changes for the private sector mean the end-client will be responsible for determining the IR35
status of an assignment with a Personal Service Company (PSC).
The rules will be consistent with the
changes brought in for the public sector in April 2017. Small business exemption to new IR35 rules
The new rules apply to ‘medium or large’ sized businesses in the private sector and all organisations
in the public sector. There’s an exemption for end-clients who are ‘small businesses’ as defined by
the Companies Act 2006, which means meeting two or more of the following criteria:
- Annual
turnover is no more than £10.2 million
- Balance sheet total is no more than £5.1 million
- No more
than 50 employees.
Where the end-client meets two or more of these criteria,
responsibility for determining the IR35 status of an assignment remains with the PSC and the new
rules do not apply. The government has included clauses in the legislation to ensure medium or
largesized businesses do not set-up arm’s length companies or subsidiaries to procure services from
PSCs.
The legislation will apply to the parent company based on the aggregate amount of turnover
and the aggregate amount of the balance sheet total of the connected entities. There’s no small
business exemption for public sector organisations and the legislation will apply to all end-clients
engaging PSC workers in the public sector