November 2020

Preparing for the Private Sector IR35 Changes from 6 April 2021

by Mark Groom

The purpose of this volume of Tax Digest is to provide a balance between explaining the final version of the legislation applicable to IR35 in the private sector from April 2021, and sharing insights on practical issues arising from its operation, including tax and commercial risks and legal and operational issues arising.

Readers are also referred to Tolley's Tax Digest 207 (January 2020), in which Justine Riccomini examined the draft proposals as they were at that time.

Given the breadth of the subject matter, for the sake of expediency, this volume will focus on the terms of the final legislation and how it operates, rather than attempting to reconcile the final version to the first draft. However, it will draw out relevant comparisons between the existing IR35 rules, where workers must determine their own employment status and account for their own taxes, and the new rules where those obligations are moved to other persons in the supply chain.

The legislative references provided in this document are all final as at the time of writing, based on the Finance Act 2020, following Royal Assent on 22 July 2020. As we go through, I have signposted several areas where further refinements are currently under review; however, these should only reinforce how the legislation is intended to work as explained in this volume, as opposed to making any fundamental new changes.

About the author

Mark Groom began his career as an audit junior with Deloitte in London in 1985. His keen interest in tax developed after five years in audit, when he migrated to join Deloitte's business tax team in Bristol. After five very enjoyable years advising many wonderful clients in the world of corporation tax, Mark recalls his department head asking him if he'd like to develop a Profit-Related Pay ('PRP') Scheme for a client, the first for the office. As PRP took off in the 90s, Mark took to it like a hot knife through butter, but it wasn't long before he was supporting clients as they wrestled with PRP's sad demise in the run up to the new millennium.

Having developed a knack for writing PRP scheme rules, and now equally adept at reinventing himself, Mark found a natural evolution from PRP into share incentive schemes, in which he continued to specialise for the next five years, before settling into his present role in employment taxes, which saw him through to partner back in London. Mark has specialised in employment taxes for the last 20 years, with a deep specialism in employment status, particularly in the media industry, which he considers remains one of the most unnecessarily subjective areas in UK taxation. Mark is currently deeply embroiled in IR35 and is advising Deloitte's Executive, as well as many clients, on transitioning ready for April 2021.

In the early noughties, Mark became Vice-Chair of the Employment Taxes Committee of the Chartered Institute of Tax, a role he has relished and been committed to ever since. Mark engages extensively with HM Treasury and HM Revenue & Customs on new and emerging legislation and guidance. He has co-authored Tolley's Finance Act Handbook for several years and is a regular media commentator and speaker at conferences. He was invited by Rt Hon Margaret Hodge MP to brief MPs on employment status in the gig economy and was one of four keynote speakers at a joint conference run by the Institute for Fiscal Studies/Chartered Institute of Tax on 'How Different Ways of Working Should be Taxed', alongside speakers from the Office of Tax Simplification and the IFS and the Professor of Taxation Law and Policy, Oxford University.

Mark has led a number of clients through tribunal as tax adviser, working with leading QCs, and remains undefeated to date in six hearings. He hopes that saying this won't be a curse and that he will be able to maintain that record, seeing one or two others through the Courts before he finally hangs up his boots.