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Why You Shouldn't Take Shortcuts With IR35

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Some significant changes are coming in April in regards to how contractors will be taxed. We all saw the headlines earlier this year of IR35 delayed to 2021 due to coronavirus and economic uncertainty around it. But now with the new year looming everyone is talking about the changes again. March will be on us before we know it and that leaves little to no time to plan and prepare for these monumental changes.

 

Should IR35 be delayed again?

 

The whole situation around is about as clear as mud right now with Brexit and Coronaviris still going on. With this some companies, in their panic, are talking about making blanket assessments for all of their workers, this isn't a great idea and could cause problems further down the line.

 

Putting all of your contractors either inside or outside of IR35 could seem like a quick and simple fix, but it will lead to bigger problems.

 

Making a blanket assessment is bad for both the business and the contractor and here is why;

 

  • The regulations require every single contractor to be assessed on a case by case basis. Assuming that everyone is the same without considering them as individuals is not right.

 

  • If you have contractors who are worried or concerned by their tax liabilities and make a blanket assessment, without considering their past working circumstances could feel undervalued or at risk. It's wise to consider contractor relationships.

 

  • Making a blanket assessment could lead to financial implications down the line. Private-sector contractors will be able to take clients and agencies to court to claim back the costs of being wrongly determined as inside IR35.

 

  • Forcing a contractor to go PAYE may go through different routes, either by being directly employed or via an umbrella company. This scenario makes the supply chain more complicated and makes it twice as hard to establish any form of compliance. Given the increased liabilities businesses now face, this is not a small problem.

 

  • You will also need to think about the regulatory changes that come with moving workers onto PAYE. Have you considered Agency Worker Regulations, as well as staff, being treated equally with your employees when it comes down to pay, holidays and hours?

 

So, what do you think? Is taking a one size fits all approach to IR35 just going to set businesses up for trouble, later down the line?

 

Are you already prepared for the changes?

 

Want to know more about IR35, the changes to IR35 legislation and how it could affect you, we have all the latest information from APSCo here.