As we edge closer to April 2021 when the private sector will be hit with new IR35 legislation, pushing responsibilities for contractor assessments and deduction of tax up the contractual chain, it is now time for businesses to dust off their IR35 plans from earlier this year for the original implementation date of April 2020.
As part of this, businesses should ensure they have robust procedures in place to deal with the changes and the additional requirements they bring, but they should also ensure internal teams are provided with the appropriate training to apply the legislation going forward.
Notwithstanding that over the summer months a vast number of businesses scaled back both their contractor and employee workforce as a result of the impact COVID-19 had on operations, we are now starting to see business pick up again with some choosing to engage with contractors rather than taking on the obligations of employees. While this may seem like an easy option now, this might not be the case early next year when April 2021 rolls round and it seems that there is still some questions in the market about what to do, how it is done and who does it.
Some of the vital points businesses should consider and act upon before the end of 2020 are as follows;
- Review current working practices and arrangements – has COVID had an impact on these and blurred the line between employees and contractors?
- Assess current supply chains to identify responsibilities – can the end user be identified and do they have the relevant information to complete your contractor assessments?
- Take time to refresh the knowledge of internal teams to the changes – having a team who can accurately and efficiently apply the changes is the key to success!
- Formalise and action the plans for completing assessments – while HMRC say they will stand by their Check Employment Status for Tax (CEST) tool, this can often return an inconclusive result and so a back-up must be in place for businesses choosing to utilise this tool.
- Where you are the fee payer, roll-out plans for processing inside IR35 contractor payments to ensure the relevant liabilities are paid to HMRC on time – contractors tend to have 30 day payment periods, however this may need to change to work for payroll
- Assess the business risk under the Corporate Criminal Offence (COO) legislation – are you comfortable your staff dealing with IR35 understand the connection and risk or is there a training requirement to support the work required?
While training and development may not jump out as a key action point for the implementation of this legislation, it is key for the success and compliance of all business sizes and types, including where elements of IR35 obligations are outsourced.
Our dedicated team can help identify and implement bespoke IR35 plans and the assist in the delivery of training to staff on the new legislation and the impact across all sizes and types of businesses.
You can also view our IR35 Helpful Guides here