April 6th and the changes to IR35 Off Payroll Working rules are very much on the horizon. The pandemic last year meant that this legislation change was delayed, and we all took a sigh of relief knowing that we had some extra time to prepare.
Hopefully, you’re in a position where you feel comfortable with the changes that are soon coming about, but if not don’t worry. We’ve put together this guide with some tips on how to plan ahead.
Firstly, what is IR35 Off Payroll Working?
IR35 is the tax legislation aimed at preventing tax avoidance schemes. Focusing on off-payroll contractors who supply their services through an intermediary; known as Personal Services Companies.
Here are some key dates to be aware of:
· 2017 - Off-payroll rules were introduced into the public sector
· March 2020 - HMRC suspends implementation of IR35 into the private sector, due to coronavirus
· April 2021 - Off-payroll working rules apply and Private Sector businesses will be responsible for determining the IR35 status of its off-payroll contractors
Now, how to plan for IR35
Last year we were given an extra year to prepare for the storm that is IR35. But if you still feel unsure about how to proceed follow our three simple tips:
· Don't leave planning until the last minute (Monday's are already pretty hectic, let's not add to that stress on Monday 5th!)
· Analyse your current processes
· Don't put in place a blanket ban
Make each of your decisions case by case to establish which contractors are inside or outside of IR35. To avoid a short turnaround or skills shortage, examine your current processes and existing contractor workforce. Assess the risks posed. Take this extra time to determine the criticality of your contractors’ role in your business.
Can you afford for your contractors not to come back to work in April?
Things to consider
Talk to your contractors
The responsibility of deciding the IR35 status of contractors lies with the end hirer. But your contractors are going through the same thing as you. So, simply talk to them. This will boost your company reputation and decrease the chances of losing valued contractors.
HMRC wants to see that you have taken reasonable care
A full review of all current and future contracts should be carried out. This will allow you to assess, in good time, whether your contractor’s status needs evaluating. HMRC will also look at the details of your contractor’s engagement. So, also include a review of your non-contractual working policies.
Document any policy and practice changes made
Policies, practices and decisions regarding your contractors status need to be documented correctly. Should a claim arise, you will need to show HMRC that you have procedures in place that are aligned with IR35 Off Payroll Working legislation.
The impact of the new rules are significant and at Kelly we are making sure we’re on hand to support both our clients and contractors. If you’re after some advice on how to plan and prepare for the up coming changes contact one of our Kelly team members at email@example.com.