Following the IR35 reforms back in 2017 for the public sector, it has been confirmed that after a year’s delay these reforms will be coming into effect for private companies from 6 April 2021. With a number of points for end-hirers to action before this date IHR’s Natasha Preocanin sat down with expert Matt Fryer of Brookson Legal to help guide you on everything there is to know, including what IR35 is, the rules and regulations relevant to you and how to determine your employment status for IR35 compliance.
Brookson Legal, specialists in the very latest HMRC rules, regulations and proposed legislation have been looking after clients’ needs since the introduction of IR35 back in 2000 and the latest reforms being pushed out to private companies has meant that organisations need to run through a number of processes to ensure their compliance. In the highlights video above, Natasha and Matt discussed some key legislative changes that end-hirers need to be aware of and need to action prior to April 2021.
With just less than six months to go until the legislation comes into force there is still plenty of time, but some key challenges hirers are finding, and shouldn’t be underestimated, is how long it can take to identify the contractor population within a business. It is imperative that employers work with their supply chain, both internal and external, to ensure a smooth transition and communication of determining the contractor’s status decision.
With “reasonable care” being paramount to determining compliance, but not defined within the legislation, there’s certainly some ambiguity to this clause making the determination process something less than an exact science. It’s all about education and then documentation, documentation, documentation!
The government does have an online tool for employers to use, CEST, but like any free online tool, it needs to be taken with a pinch of salt and an air of caution! Without understanding how IR35 works and how to determine a contractor’s employment status, CEST will be next to useless.
Ultimately the legislation was bought in to ensure contractors are paying the right amount of tax… something high on HMRCs list! For end-hirers, this reform needs careful consideration in terms of commercial decisions but also in understanding contractor hiring. Ensuring you have a robust system, documentation and communication channel in place before April 2021 will ultimately put you in good stead to be compliant and minimise any needs for conversations around pay rates, contractor challenges or even blanket bans.
Although the reform comes into effect in April 2021, this is just the start and businesses will need to consider how to weave IR35 into their new business as usual.
Check out the video for some of the key highlights or for the full interview, tune into our podcast!
Brookson Legal is an SRA regulated law firm that provides a range of IR35 solutions to the flexible working supply chain.
Part of the Brookson Group, they have been supporting hirers, agencies and contractors with IR35 for over 20 years, carrying out thousands of employment status assessments each year.