HMRC issue statement on conditions where the intermediary is a company for IR35.

Over the last few weeks, you may have seen the information that we have posted on the “hiccup” with the drafting of the IR35 Reform Legislation and the Guidance issued by HMRC. Well it appears that HMRC have sat up and listened.

In conversations, they noted that the interpretation of the changes had caused unnecessary issues which placed umbrella companies as an intermediary for the purposes of the legislation, leaving the burden of taking all tax and NI deductions to the recruitment agencies. HMRC have now confirmed that it was not their intention to catch umbrella companies in this way and have provided the following official statement after a meeting between stakeholders and HMRC officials on Wednesday, 14 October.

The statement reads as follows: “Off-payroll working from 6 April 2021 – interpretation of section 61O and the conditions where the intermediary is a company”.

Many will argue that this is simply HMRC’s guidance on the matter, however this does not amend the legislation at this time. It is expected that, in time, the amends will be made which will keep the umbrella company away from the definition of an intermediary for the purposes of the legislation.

We will watch this space, but for now it does provide some comfort to umbrella companies and to those agencies who would have found themselves in quite a predicament come April 2021.

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