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IR35 – An Update

The Jonathan Lee blog section is a great place to discover all the latest news and views on the
sectors we work with and the services we provide.

​Following my last IR35 blog a couple of weeks ago, the draft Finance Bill 2019/20 has now been released by the Government.  As we anticipated, it confirms the intention to continue with the proposed changes for off-payroll workers in the private sector in April 2020. 

What is clear to me and to many of my counterparts in the industry is that the Government has failed to address the many and major concerns raised over the course of the consultation process, and has not amended its position on IR35 in the slightest.  The draft legislation does include further details regarding the client-led appeals process and the exemptions for small businesses.

We will be running some sessions on IR35 for both clients and contractors over the coming months.  If you are interested in attending, you can fill in the form and we will contact you to book you in for one of our events.  

In the meantime, we thought it would be useful to summarise some of the key points below for you:


In line with the public sector changes made in April 2017, the end user (client) will be responsible for determining the employment status of all off-payroll / contract workers for their organisation.  This includes all PSC contractors.

HMRC will require that the end user produces evidence of their determination for each and every contractor in the form of a Status Determination Statement (SDS).  The legislation prescribes that the end user will be required to share the SDS with all parties in the contractual chain, including the PSC contractor.  

In theory, this should rule out blanket determinations of “inside IR35” by end users as the SDS will be considered to be invalid if it is later found that the end user has failed to take reasonable care in preparing, assessing and agreeing the determination.


It is not yet clear whether agencies will be able to appeal determination decisions but in many cases, the agency will be the fee payer and therefore will need to work closely with their clients throughout the process of determining IR35 status.

However, the contractor will have the right to appeal.  By allowing the contractor a voice in the determination process, it is hoped that the number of disputes will be kept to a minimum.  The legislation makes statutory provision for the contractor to appeal any determination made, with the end client being responsible to respond within 45 days of the appeal.  Where an appeal is successful, a new SDS must be furnished by the end user.


HMRC has confirmed that the first agency in the supply chain “has enough visibility of the labour supply chain to influence compliance” and also that the end user/client can influence compliance through careful selection of the suppliers and agencies that they engage with.

The latest consultation position will therefore hold; liability can transfer up the supply chain as far as the end client if HMRC is unable to collect from the first agency.  HMRC has indicated that further guidance will be provided on circumstances where unpaid liabilities are not transferable up the supply chain.


HMRC has also confirmed that small businesses, as determined in sections 382/383 of the Companies Act 2006, will be exempt from the new IR35 rules where they are the end user. 


At Jonathan Lee, we pride ourselves on working closely with our clients and contractors, and this will continue through the changes to IR35.  As mentioned above, we are currently arranging a number of events in late September and early October for both clients and off-payroll workers to learn more about how we can support you.


If you have any questions about IR35 and its impact on you as either a client or a contractor of Jonathan Lee, please feel free to either email meor call me for a discussion on01384 446153.  

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