Private sector businesses have less than five months to prepare for IR35 - get your copy of the 'IR35 Guide for End Clients'
IR35 | 3 MIN READ
Businesses have less than 5 months to get their IR35 houses in order
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Companies who choose to bury their head in the sand posing major risk to their operations
From April 2020, the responsibility for determining IR35 status shifts to the end client, meaning medium and large private sector businesses have less than five months to take the necessary steps and reasonable care to identify whether their contractors fall inside or outside IR35.
In our survey of more than 1,000 contractors more than a third (40%) were unaware of the upcoming off-payroll reforms to impact the contractor community next April. This raises concerns that private sector employers are yet to begin reviewing their contractual workforce and how they’re supplied.
Phil Beardwood, compliance & assurance director at Morson, said:
“Some businesses believe that it’s the responsibility of the labour provider to determine the status of their contractor workforce, yet it’s down to the end client to conduct these reviews and ultimately make this decision, which may provide the answer as to why some contractors aren’t yet aware of the forthcoming changes.
“Uncertainty caused by the Brexit narrative and the Chancellor’s decision to cancel the Budget has led to some organisations believing that the forthcoming IR35 legislation reform will be delayed or even cancelled.
“This is certainly not the case and the new tax regime governing contractors will remain top of the agenda in the private sector. The countdown to comply is on, with those companies who choose to bury their head in the sand posing major risk to their operations.”
“We strongly recommend that end clients do not simply adopt a blanket approach as a quick fix to reducing their tax risk. Lessons learned from the public sector rollout means that those who do try to cut corners risk losing contractors to a competitor who may correctly deem the same individuals to be outside of IR35. Pay rates could also increase considerably from those deemed as unnecessarily inside and transferred under PAYE, as end clients try to retain these in demand skillsets."