IR35 – what you need to know now!

For comments and advice surrounding the recent postponement of the IR35 off-payroll legislation please click here.

With reform to IR35 off-payroll working rules being applied to the private sector from 6 April 2020, we teamed up with MIA members Blaser Mills Law and Advanced Resource Managers (ARM) to provide a free to attend seminar this week (3 March). 

The aim of the seminar was to highlight to the attendees - 21 members and industry guests - the effect upon business plus equip them with details of the changes being implemented to the IR35 rules and how to prepare for them.

After a networking lunch, James Simpson, Partner at Blaser Mills Law and Chester Boothe, Client Relationship Manager at ARM both offered their help and advice.

Why are the IR35 changes necessary?

James Simpson explained why the Government has deemed the regulatory changes necessary - as a result of widespread abuse of PSC arrangement leading to significant tax leakage. With the terminology being complicated and difficult to understand, James offered a broad outline helping the audience determine what applied to their own businesses. 

CEST - an online assessment

James explained that businesses can insist workers provide necessary information to confirm if they fall within the rules. He stressed that the control of the worker by the company is an important factor in determining if the relationship is one of “deemed employment” and what needs to be established is whether that individual can decide their own hours, place of work, leave etc.? 

He went on to detail an anonymous online test (CEST) provided by the Government that will assess if a worker should be classed as employed or self-employed. James stated that unless it has been manipulated HMRC will stand by the results of this test which can be found at: https://www.gov.uk/guidance/check-employment-status-for-tax .

The Blaser Mills Law presentation ended with a number of action points for companies and intermediary businesses; designed to help them best prepare in terms of legal protection and taxation before 6 April 2020.

How many of us feel prepared for IR35 changes?

Chester Boothe began his presentation by reassuring the audience, many of whom confirmed that they didn’t feel fully prepared for the changes ahead. Saying that the state of the market is ‘somewhat confused’, Chester offered his advice on preparation:

• Get to grips with the legislation and the impact on your business
• Audit your workforce that includes everyone
• Review your supply chain arrangements
• Communicate with your contractors and treat them with respect
• Document everything
• Don’t issue Blanket Determinations – assess the impact and risks to your business 

Chester then continued by addressing blanket determinations and why these have happened in larger companies and how they could easily damage the relationship with contractors – he reinstated that clients should “take reasonable” care.

Loss of earnings – No Win-Win

Highlighting the issue of loss of earnings for those workers deemed inside IR35 Chester suggested that there may also be a cost to the end client – how will projects be delivered in the future! However at this juncture, he said there appears to be little talk of businesses increasing rates to help contractors make up for this loss of earnings. 

 

The presentation concluded with Chester leaving us with this question:

“Will IR35 damage the UK economy and disrupt our flexible workforce arrangements?”

Final words from James Simpson at Blaser Mills Law: “These new rules are a fundamental change to the existing landscape. It is important for businesses to check if the rules apply, otherwise they potentially face significant tax liabilities” 

Further information and contact details:

If you would like to know more about our upcoming activities, please go to our Events page. Alternatively, contact the MIA team at info@the-mia.com or on +44 (0)2476 692 600 to find out more.

If you would like more information about IR35 and how it could affect your business, please contact: 
James Simpson, Blaser Mills Law – 01494 478 689 – jfs@blasermills.co.uk 
Chester Boothe, ARM – 07384 116 519 – chester.boothe@optamor.com