Are contractors prepared for IR35?

Rebekah Valero-Lee ir35


As we count down rapidly towards the April 2020 IR35 deadline, we surveyed our contractor community to understand how prepared they are for the impending changes. More than 1,000 contractors gave their views, of which almost 97% operate through their own limited company.

Discover how prepared the contractor community is and what their concerns are, regarding the impending changes to off payroll working.

Read on to find out:

  • If the majority of contractors deem themselves inside or outside of IR35.
  • How contractors are determining their status.
  • How many contractors have considered or are even aware of IR35.
  • What contractors want from their agency and the end client.

With the private sector implementation date very much confirmed for April 2020, 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.

Based on the results, privately-run businesses 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.

Communication is key. As of April 2020 the end client must make sure that they inform the worker of the IR35 determination of their assignment.

The contractor will be entitled to ask the client for information on IR35 status and challenge IR35 decisions, HMRC expects end clients to put in place a mechanism to allow a contractor to challenge a decision.

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.

It’s crucial that you have begun your preparations for the April 2020 deadline.

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.

For personalised advice on what your organisation needs to be doing now and for support with future planning, contact ir35@morson.com to start the conversation or visit our IR35 portal for more information and to book a call with one of our experts.