Who will be liable as a result of the IR35 changes in April 2021? This question has been one of the most common questions Consortia have been asked so far.
The overarching point is that the fee payer will become liable for the tax as of April 2021 instead of the contractor. The fee payer could either be the hiring end client or the third party recruitment company used, for example, Consortia.
The fee payer is usually deemed as the party closest to the PSC and the contractual chain i.e physically paying the contractor. The fee payer will be responsible for paying gross payment if the PSC is outside of IR35 or net if the engagement falls within.
Many end-user clients are now looking to offset the tax liability from balance sheets and remove the responsibility from themselves by looking for support from recruitment partners such as Consortia.
It is worth noting that there will be fines and penalties in place come April should the rules of IR35 be breached.
- It will now be the fee payer (end-user client or recruitment agency) that is liable for tax come April 2021.
- There will be fines and penalties in place come April 2021 should the rules of IR35 be breached.
- By using a third party recruitment agency such as Consortia the tax liability moves to them and not the end-user. Consortia can provide a complete solution for contractor management, payroll, IR35 compliance and full audit trail.