As we know the Autumn Budget was cancelled this month, but organisations must not let this, plus other political factors such as Brexit or the upcoming General Election, cloud their decision making and delay their IR35 preparations. It is integral that private sector organisations continue in their preparations for the upcoming reforms in April 2020 as failure to comply could leave your business open to extra expense and exposed to risk.
What are the risks if I don't prepare?
End clients could be left open to financial risk if their contractors are found to be incorrectly determined. As you, the end client, will be responsible for determining whether a contractor is ‘inside’ or ‘outside’ scope you must ensure you are making correct assessments. Morson, alongside our specialist partners Champion Contractors and Weightmans LLP, can support you with the assessment and determination of your contractor workforce - contact us atIR35@morson.comto speak to our expert IR35 team.
If HMRC finds contractors to have incorrect determinations then the end client will face potential tax / National Insurance losses.
For example: For a contractor on £100k the tax / National Insurance would be circa £20k. Therefore, for a contractor on a salary of £100k who is found to have been incorrectly determined, the end client would face a bill of£80k plus interest and penalties/fines over 4 years.
NB. It would be the end client liability if the contractor is engaged direct, if engaged via the agency route the liability moves to the agency on the proviso the client has demonstrated “reasonable care”.
Legal, reputational and operational risk:
Outside of financial risk, operational, legal and reputational damage can arise if businesses do not prepare for change appropriately or early enough.
Delay to projects due to loss of resource, litigation with HMRC and a restriction to the flow of contract talent are all risks that may arise if you do not prepare early or well enough.
Is it all doom and gloom?
Whilst IR35 represents a challenge for many businesses, completing this review process and achieving full visibility of your contractor workforce can
result in a number of business benefits, including:
Streamlining processes and creating operational efficiencies.
Identifying cost saving opportunities.
Ensuring supply chain compliance.
Delivering a more inclusive recruitment process.
Enhancing your flexible workforce recruitment process.
How can Morson support you?
In our role as a specialist recruitment provider, we are committed to supporting our client community through legislative changes. Morson, alongside our IR35 expert partners, are on hand to support companies who use contract resource to introduce a robust process to ensure compliance. We can support you with your full review of your contractual workforce and provide a practical and commercial solution for your business.