Next month, an important aspect of IR35 changes. For big companies engaging with a contractor via the contractor's own limited company, the responsibility and risk of deciding whether it's an employment-like relationship and employment taxes should therefore be paid falls upon the customer, not on the contractor. That's it. That's the change.
For a sole trader, IR35 is objectively of no relevance of any sort, as it relates specifically to that situation where someone is working and billing via an entity that sits between them and the end user. But what's becoming very clear is that agents, recruiters and employers are often attempting to deal with the IR35 change without having a basic understanding of what IR35 even is!
In particular, we're seeing multiple instances of sole trader freelancers being told that they need to go on PAYE or via an umbrella company (also PAYE) because of IR35. It's often going to be the case that those people should indeed go on to PAYE. It hasn't got anything to do with IR35, though. It's just basic employment tax rules that have been in place for decades. People were always at risk by engaging sole trader permalancers - an HMRC PAYE inspection would give them a massive and expensive problem if it emerged that they were failing to put people who were really employees on PAYE. It's for the best that they're addressing that issue - but they're doing the right thing for the wrong reason!
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