6th April 2020 may seem far away, but HMRC is clear that the extension to the private sector will be based upon the public sector IR35 rules, despite the fact that a consultation remains ongoing until May this year. The consultation only proposes small refinements, see our article “IR35 consultation explained” , and although objections will undoubtedly be raised within the consultation, the stage is very much set. The question now for those hiring or supplying contractors and interim managers is whether there is any advantage in delay, given that there are a number of positives to early preparation.
First, contractors and their clients are likely to be asking about the new rules. Even if not yet, questions will come soon and you may like to have your policy decisions ready.
Second, whilst historically there has been no real need for private sector hirers and recruitment businesses to understand IR35 because it gave rise to few risks, the new rules as planned will impose obligations for determining IR35 status on hirers and relevant supply businesses, with significant tax and NICs liabilities arising for them from the decisions made. This may affect the way contractors are paid, and the applicable charge rates, so necessitating new contracts and possibly new arrangements with third parties, depending on policy decisions made. The implementation date of the new rules is 6th April 2020, but hiring requirements, contracts and projects are not determined by this artificial time frame. In particular, existing framework supply contracts and already running or planned projects may extend significantly beyond the date the old rules expire (except for small business) on 5th April, so demanding review, negotiation and amendment well ahead of that date.
Also wherever there is chain supply, maintaining full chain compliance will be important, and once this is on the agenda other legislative and commercial requirements come into play. Where before there was little risk, now the risks and options, and the reaction from the parties involved, all demand consideration. In short, employment status and tax ramifications will affect cost and liability and thus long term planning. How you address these issues will be critical, with adequate preparation high on the agenda. On the flip side, delay could lead to loss of opportunity and damage to operations.
For these compelling reasons, it makes sense to get a good understanding of this subject as soon as possible.
In times such as this gaining objective legal advice from specialists who speak your language is critical. IR35 is a complex legal issue, based on determining employment status and interpretation of tax legislation. This is a key part of our core speciality. Testament to our credentials, the first ever IR35 case (2002) won by a contractor was founded on contract terms devised by Lawspeed, whilst the limited company opt out in the Conduct Regulations, a key assistant for many agencies and contractors over the years, was proposed by us and adopted by the government in 2003. With this unique background, and being wholly independent of the supply chain, Lawspeed is ideally placed to be your professional advice partner on all IR35 and contract engagement areas.
We are now holding board room style IR35 master classes in bite size chunks throughout the year, but however you want to gain the knowledge, whether through in house briefings or via written reports, our services and solutions will put you in the position where you fully understand the issues, and are best protected against the risks that arise.
One year is not that long! Call us on 01273 236236 to book your place at an event, or simply for an informal chat.