IR35 – Who’s working for you?

If you are a business with more than 50 employees or a turnover in excess of £10.2m you will be in scope for the IR35 tax changes coming into force in less than eight months’ time.

In April 2020 the burden of categorising contingent workforce tax status shifts to companies and deciding if they fall under IR35 or not; then if they do taxing them like employees and paying employers national insurance contributions.

There is a lot of bad press and lobbying occurring, but the changes seem set to happen and I advise you prepare for them and ensure the financial impact is kept to a minimum.

1 – Establish who your contingent workers are; a good place to start is identify those who provide their services directly through a personal service company (PSC) sometimes called an umbrella company.

2- Agency, if you make use of agencies to source your contingent workforce discuss the situation with them and agree a plan of action.

3 – Case review each contingent worker as there is no absolute test for those who fall inside IR35. There are some guidelines such as the autonomy given to a contractor; right to substitution; mutuality of obligation; financial risk assumed and integration.

Having worked in the public sector when IR35 was rolled out I would advise against the temptation to blanket assess every contingent worker as in scope for IR35, this may reduce the financial risk but it will have a direct negative impact on a business’s ability to retain and attract expertise; the best approach is to mitigate the risks through a thorough case review but balance it with the need to flex up and down your workforce as required.

If you need expert HR consultant support with your plans to get ready for IR35 go live date please get in touch to discuss your requirements jacqueline@henrysarkmanagementconsultantsltd.co.uk

Useful links –

https://www.gov.uk/guidance/understanding-off-payroll-working-ir35

https://www.personneltoday.com/hr/off-payroll-working-ir35-rules-private-sector-guidance/