Employers in the private sector will need to take "reasonable care" that they have properly assessed workers' tax status once new IR35 rules come into force, according to the government's consultation paper.
In April 2017, the obligation in the public sector to determine tax status of the worker has moved to the hirer and fee payer. These off-payroll working rules will extend to medium and large businesses in the private sector from April 2020.
In the recent consultation document, HMRC suggests it will require a hirer to be able to provide reasons for its IR35 status decisions. Businesses will be required to set up a process to allow for these decisions to be challenged by the contractor.
In the guidance, HMRC defines reasonable care as “doing everything you can to make sure the... documents you send to HMRC are accurate”. It also says that it will take “individual circumstances into account when considering whether you’ve taken reasonable care”.
