IR35 legislation has been in effect since 2000, and over that time, there have been several adjustments and consultations that have led to how freelancers and contractors pay tax.
Read our timeline below, created in collaboration with Markel Tax, to understand the history of IR35 and how it has developed, listed backwards from 2022.
October 17th 2022
Chancellor Jeremy Hunt announces that the IR35 repeal will not take place, and the Off Payroll rules will remain in place.
September 22nd 2022
The Chancellor of the Exchequer announces that IR35 will be repealed from 6 April 2023. Responsibility (and the liability) for status determination will return to the contractor.
April 6th 2021
Private Sector IR35 goes live. Responsibility (and the liability) for status determination switches from the contractor to the end-client fee-payer.
March 18th 2020
Private Sector IR35 is postponed a year, until April 2021, due to Coronavirus Pandemic.
January 7th 2020
The government announced a review into the implementation of the IR35 changes.
November 2019
HMRC released an updated version of the Check for Employment Status for Tax (CEST).
March 2019
The government launched a consultation on the implementation of the off-payroll working rules reform which ran until 28 May 2019.
October 29th 2018
A private sector reform was announced.
April 2017
New off-payroll rules were implemented in April 2017 for contractors working for public sector organisations. Instead of contractors themselves being responsible for determining their IR35 status, this obligation has been handed to the employer of each contractor, i.e. the client. Where a contractor is considered to be inside IR35, the fee-payer must deduct employees’ NICs and income tax from the contractor’s pay, as well as paying employers’ NICs.
March 2017
A new IR35 employment status test, Check for Employment Status for Tax (CEST), was launched in early March 2017 to help workers, clients and agents determine whether a worker falls inside or outside of IR35.
December 2016
The draft legislation ‘off-payroll working in the public sector: reform of the intermediaries legislation’ was published by the HMRC, explaining how IR35 would be applied to public sector bodies in April 2017.
March 16th 2016
The government announced there would be a ‘clamp down’ on off-payroll working within public sector organisations.
April 6th 2015
After being reviewed by the IR35 forum, the BETs system was found to be ineffective for customers. The forum reported that it was being used very little and not fulfilling its intended purpose. Following this, the tests were abandoned.
January 2015
HMRC issued a series of 32 recommendations on how to improve IR35, following a review of input provided by IR35 forums. HMRC acknowledged that IR35 was ineffective and claimed that non-compliance with the legislation was widespread.
April 2012
HMRC began to test a new approach to IR35 administration, following feedback from the IR35 Forum.
May 2011
HMRC published ‘Business Entity Tests’ (BETs), accompanied by a selection of standard IR35 scenarios, on its website. Business Entity Tests were designed to help contractors understand the likelihood of HM Revenue and Customs considering their contracts and day-to-day routines as either falling inside or outside of IR35.
April 6th 2007
Managed Service Company (MSC) legislation was enforced to remove the potential tax advantage offered by using MSC schemes, which were believed to be used in an attempt to escape paying tax and NI.
2002
Anti-IR35 groups, such as PCG, attracted more attention online as they moved their focus onto case law. The first IR35 case ‘Lime IT vs Justin’ was won on behalf of a contractor by Accountax Consulting, now part of Markel Tax.
April 6th 2000
IR35 was enforced and introduced as law after being implemented in the Finance Act 2000. Initially, up until 2017 in the public sector, intermediaries, such as personal service companies providing the worker’s services, were responsible for determining the worker’s tax status.
1999
PCG (now IPSE), a British organisation for professional and self-employed individuals established in 1999, sought permission for a judicial review of IR35. PCG wanted IR35 to be abolished completely, however, the organisation lost its appeal at the end of 2001 when the high court ruled in favour of Inland Revenue.
March 9th 1999
IR35 plans were first revealed by Gordon Brown, who was Chancellor of the Exchequer at the time, in response to tax and National Insurance avoidance. The term itself was coined from the press release reference ‘Inland Revenue 35’.
Discover our knowledge centre for more help and guidance, or read more about Caunce O’Hara’s contractor insurance.
Please note: This article provides guidance for information purposes only. It should not be relied upon wholly when making or taking important business decisions – always seek the services of an appropriately qualified professional. The views expressed by websites referenced to are limited to those of the websites, and do not necessarily reflect the views of Caunce O’Hara. Caunce O’Hara is not affiliated with any of the brands, companies or websites mentioned in this article.
IR35 checklist for contractors
True or false: Myths around IR35
