In light of the Covid-19 crisis, HMRC has written to a number of taxpayers and businesses under investigation to say they are suspending their IR35 enquiries. The correspondence says that during the current lockdown, HMRC will not request information or press for responses to existing requests.

It’s thought that HMRC are experiencing capacity issues while they focus on dealing with the Covid-19 crisis. The taxman has been tasked with setting up and running the government’s coronavirus furlough schemes, with the Coronavirus Job Retention Scheme launching this week ten days ahead of schedule.

HMRC has also set up a dedicated hotline available to any taxpayer experiencing difficulty in paying their tax bill because of the impact of Covid-19. Taxpayers may be better using any time they have now to proactively contact HMRC rather than store up problems for the future if they feel they will be unable to meet the timescales for paying bills.

With Rishi Sunak declaring the COVID-19 crisis a ‘special situation’ in his Budget 2020, tax experts are pointing out that it could be a good time to obtain more favourable payment arrangements. Certain clauses within the Finance Bill 2009 make provision for ‘Time to Pay’ arrangements to be drawn up in special situations, and for penalties to be waived, regardless of whether a penalty due date has already been triggered.

It’s also in the country’s interests to keep the contingent work force resilient, with experts predicating that many businesses will move to an ‘on demand’ working model to recover from the crisis. Despite 44 percent of businesses experiencing lay-offs, certain sectors are experiencing increased demand due to the Covid-19 Crisis. A flexible contractor workforce allows skills to be deployed where they are needed, and this is crucial in dealing with the economic impact of Covid-19.

For this reason, the delay of the IR35 reforms until April 2020 will be a huge relief for many contractors and businesses. Around half of the businesses who announced a ‘no PSC’ policy have now reversed their decisions. However, there are a significant number of large companies such as IBM and Lloyds that remain committed to their PSC ban, saying they have already implemented changes to their working models in preparation for the reform.

This content has been supplied by IR35 Guru

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