The extension of off-payroll working rules to the private sector should be delayed by a year, according to the Institute of Chartered Accountants in England and Wales (ICAEW).
The ICAEW says the start date should be pushed back to 6 April 2021 to give all stakeholders – including HMRC – time to prepare. From April 2020, HMRC intends to extend off-payroll working rules, known as IR35, to private sector contractors who work for medium and large businesses.
IR35 applies to individuals who provide their personal services via an 'intermediary'. An intermediary may be another individual, a partnership, an unincorporated association or a company; however, the most common structure is a worker providing their services via their own company – known as 'personal service companies' (PSCs).
The rules are specifically designed to prevent the avoidance of tax and national insurance contributions (NICs) by those using PSCs and partnerships, and were introduced to the public sector in 2017.
Commenting on the changes, the ICAEW said: 'The proposed legislation is ambiguous and falls below our principles that tax legislation should be simple, certain and properly targeted. The draft legislation contains gaps that HMRC is having to address by providing extensive guidance. Onerous responsibilities are allocated in an uncertain way. It is unlikely to enhance compliance with the existing IR35 legislation that HMRC has struggled to enforce effectively since 2000.'
The ICAEW says the delay should be used to improve the legislation, resolve operational issues and make progress with the Check Employment Status Tool (CEST). It also suggests that HMRC publishes further guidance.