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HM Revenue and Customs has published further guidance for intermediaries on the implementation of IR35 legislation covering the tax treatment of public sector contractors from April 6.
The technical note said that, subject to parliamentary approval and Royal Assent, the measure will apply to contracts entered into before the implementation date. If work is completed before then but payment made on or after April 6 2017, it will be within the new legislation.
IR35 may apply if someone is working for an organization through an intermediary, typically a Personal Service Company (PSC). If IR35 applies, all payments to an intermediary are treated as if they were the worker's employment income, and the intermediary must pay any tax and National Insurance contributions (NICs) due.
From April 2017, where workers are engaged through their own limited company (i.e. a PSC), responsibility to apply the IR35 rules will fall to the public sector body, agency, or other third party paying the worker's company. The public sector body, agency, or other third party will be liable to pay any associated income tax and NICs.
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