IR35 reform postponed until 2021 due to Coronavirus
24 March 2020
Due to the COVID-19 outbreak the government has confirmed that the implementation of the IR35 off-payroll legislation will be delayed until 06.04.2021. The MIA recently hosted a seminar for the industry on this topic which included presentations from James Simpson, Partner at Blaser Mills Law and Chester Boothe, Client Relationship Manager at Advanced Resource Managers.
James and Chester have kindly provided the below insight and advice following this postponement.
Update from Blaser Mills Law
In a move to attempt to protect the economy from the Coronavirus outbreak, Chief Treasury secretary Steve Barclay announced that the controversial off-payroll IR35 tax reform would be pushed back one year until 6th April 2021.
Who will be affected by IR35?
These rules will affect all medium to large businesses, i.e. those that satisfy 2 of the following: a turnover in excess of £10 million, a balance sheet total of more than £5.1 million and/or more than 50 staff.
The news of a postponement will come as a huge relief for those companies who would have been affected by the IR35 reform and will significantly reduce the strain and income loss for self-employed businesses. Many businesses and individuals were simply not ready for the reforms with amendments to the draft legislation still being made in February.
Businesses will now have plenty of time to prepare and successfully implement the IR35 changes when the time comes and in the meantime the deferral gives them valuable time to focus on managing the significant effect of Coronavirus on their business.
Advanced Resource Managers (ARM)
Many businesses have already borne the worst of the hard work and pain in implementing this change
Each client will need to decide whether or not to continue as planned, they can either continue but with relaxed timescales or to postpone this implementation for the fuller year.
This decision will need to be made on a client’s specific circumstances largely dependent upon current progress with the implementation project plan, with consideration given to both competitive and commercial considerations.
Whatever your decision may be, our key recommendation is that you clearly communicate this to your contractor population as soon as possible to minimise your disruption.
For those companies that satisfy 2 of the following; a turnover in excess of £10 million, a balance sheet total of more than £5.1 million and/or more than 50 staff. Large Companies;
This will be welcome news for many organisations who were struggling to make the necessary changes in time. It means that you will not be required to make status determination statements (“SDS”) until April 2021. The SDS has no legal status at the moment and companies can continue to engage contractors via their personal service companies (“PSC”) as normal.
Contractors; You now have more time to think about how you will offer your services to end clients - is the Statement of Work (SOW) model appropriate for you? Start talking to your clients about the benefits of that model. In the meantime, you will be able to carry on working via your PSC and will continue to be responsible for deciding how to pay yourself and accounting for tax.
Let’s use this extra time to adopt the correct working practices that maximises your ability to retain your “flexible” contingent workforce.
Blaser Mills contact details:
Blaser Mills have been and continue to advise businesses on their employment and HR strategy and planning. If you would like a video call with one of their employment lawyers please contact James Simpson, Head of Employment, on 01494 478689 or at firstname.lastname@example.org
ARM contact details:
Contact Chester Boothe (M) 07384 116 519, who can discuss your queries over the phone or can arrange a video call.