Rebekah Valero-Lee ir35 in contracting
The draft IR35 legislation is out and its release coincides with the results of our ‘off-payroll rules’ contractor survey.
What’s clear from the draft is that the Government is pressing ahead with the April 2020 reforms by confirming its proposals laid out in previous consultations, albeit with a few amended details and further clarification around client-led appeals and small business exemptions.
You can review our detailed summary of the draft Finance Bill 2019-20 here.
With the private sector implementation date very much confirmed for April next year, our survey results show that IR35 confusion is still prevalent among the contractor community, particularly around understanding whether they are deemed inside or outside.
More than 1,000 contractors gave their views, of which almost 97% operate through their own Limited company. Yet of these, more than a third (35%) have not considered their IR35 status within their current assignment. From those who did answer yes to ‘have you considered your IR35 status?’ a quarter (25%) of these then went on to say that they were either inside or unsure of their status.
Better education is needed, with more than half of all those surveyed saying they don’t understand how to determine their own IR35 status and a further 40% are completely unaware of the upcoming reforms.
How does this affect our private sector clients?
Based on the results, a privately-run business like yours will likely have a number of contractors that are operating through their own Limited company, yet are deemed inside of IR35 legislation.
Failure to identify these individuals and put proactive measures in place to determine whether a contractor falls within the scope of IR35, could see you become liable for paying back tens, if not hundreds of thousands of pounds in unpaid tax.
It’s crucial that you begin to prepare for the April 2020 deadline now.
We’ve partnered with IR35 specialists, Champion Contractors and Weightmans LLP, to ensure our clients have access to the specialist knowledge and experience needed to remain compliant.
A sense of complacency within the industry could see some businesses leaving their preparations until it’s too late. Doing so has the potential to cause upheaval to your operations, impact ongoing projects and increase the level of risk faced by your organisation.
Together with our experts, we can work with you to communicate these changes to your workforce, develop good housekeeping procedures to effectively analyse and manage your contingent labour and implement an independent IR35 testing tool that can successfully determine the status of your contractors and minimise the risk to your business.
Our advice is to act now
Our contractor survey received more than 600 questions around IR35 legislation, such as:
- Will my client ask me to be involved in the assessment process?
- What happens if my client deems me inside IR35?
- Will I be able to appeal the client’s determination?
- Will I need to work for more than one client to remain as a limited company contractor?
- Will sub-contractors be offered permanent positions?
This is just a snapshot of the type of concerns that were raised. In response to such a high number, we will go into more detail about these over the coming months via our ongoing newsletters, blogs, guidance pieces and more.
Sign up to our seminar
We will soon be announcing the dates for our upcoming IR35 seminars in Birmingham and Bristol, following the huge success of our last events. Be sure to email firstname.lastname@example.org to be notified when these events are live and secure the chance to speak with our experts face to face about managing the effect of the upcoming reforms within your organisation.
We have extensive knowledge and experience in supporting legislation changes around IR35, having worked together with numerous public sector clients in preparing for their deadline back in April 2017, which makes us the IR35 partner of choice to you and your business email IR35@morson.com for more information.