06 Apr 2020 4:05 PM

The global pandemic has meant some expected changes have now been put off until next year, but shouldn’t be entirely forgotten.

IR35

The reforms to the off payroll working rules in the private sector were due to come into effect from 6 April, passing responsibility for determining the employment status of contractors from individuals to those using their services – either end users or agencies. Between concerns on the impact of the rules themselves and perceived problems with HMRC’s online tool set up to work out if the rules apply – known as CEST (check employment status for tax) – the roll out of the changes has been mired in controversy.

Following a government review in February of the implementation, contractors and businesses hoped that the project might be either put on hold and substantially reworked or cancelled. A week after confirming in the Budget that the reforms would go ahead, the Chief Secretary to the Treasury Stephen Barclay announced that the scheme implementation was indeed being postponed, but is still set to reappear in 2021.

Meanwhile HMRC has adapted and enhanced the CEST tool in response to the criticism, altering language and adding more detailed questions. The changes have resulted in a greater completion of the online questionnaire in the run-up to the initially expected implementation.

Digital links

With only days to go before the deadline, HMRC has also postponed a requirement for businesses registered under Making Tax Digital (MTD) for VAT, to use ‘digital links’ in transferring data from Excel or other sources for their online reporting. Originally slated to come in from 1 April, the deferral is seen as easing pressure on businesses already struggling in the wake of Covid-19.

Defined as an electronic transfer or exchange of information between software products or applications, digital links specifically excluded use of ‘cut and paste’ methods except during the initial transition year. The soft landing period for such transitions was due to end either on 1 April or 1 October 2020, depending on when the business first registered for MTD for VAT.

Business will now have until their first VAT return period starting from 1 April 2021 to implement digital links fully.

There are likely to be further measures and compromises to come as we get to grips with the full implications of the current shutdown. However welcome these postponements are, it is worth remembering that they are just that – postponements – and these issues will come back into focus over the coming months.