Are you IR35 ready?
We don’t want IR35 to be any more complicated for you than it has to be. That’s why we’ve crunched our knowledge to create the following easy-to-follow summary of the basics.
What is IR35?
IR35 also known as the ‘intermediaries’ legislation’ – a set of rules designed to assess whether a worker billing their services through an intermediary is a “disguised” employee for the purposes of paying tax and NIC. You may have heard this referred to as the Off-Payroll rules.
When does IR35 come into force?
IR35 has been in force since 2000 but reforms to the rules are happening next year subject to technical consultation. Under these reforms, the person responsible for determining whether a working arrangement falls inside or outside of IR35 is changing.
From 6 April 2020, if you are a medium or large-sized private sector end-user, then you are responsible for determining the IR35 status of your workers.
If you are a small private sector end-user (under the Companies Act 2006) then the intermediary is responsible for determining the IR35 status of your workers.
Until 6 April 2020, public sector end-users and private sector workers are responsible for identifying IR35 status.
How do I comply with the IR35 reform?
Following the IR35 reform, medium andlarge private sector along with public authority end users must:
- Assess whether any existing or new workers billing through an intermediary fall within IR35 using a tool such as HMRC’s CEST tool to help.
- Complete a Status Determination Statement (SDS) summarising the outcome of that assessment including the deemed status and reasons behind that conclusion.
- Issue the SDS to the worker and their intermediary (e.g. their agency).
It’s essential to follow this process and conduct your SDS assessment with reasonable care. Failure to do so can result in you becoming liable for any unpaid tax, NICs, fines and interest.
It’s also important to note that if HMRC cannot recover monies owed from the worker or agency, you can also become liable.
What happens if a worker disagrees with my assessment?
If a worker or their agency disagrees with your SDS, you must both follow the status disagreement process. Under this process, you must respond to the disagreement within 45 days by either changing your decision or reinstating your original decision with supporting reasons.
How can Omni help?
Our specialist IR35 Connect consultants can take away the headache and manage the risk.
We can work with you impartially to:
- Capture and analyse data on your contractor workforce
- Guide you through the status determination and appeals process
- Make comprehensive and defensible risk assessments
- Adopt delivery models to retain business critical contractor skills
- Adopt compliant contingent workforce planning processes
- Manage communications with your contingent workforce
Our IR35 brochure gives more detail on the questions that you should be asking yourself as an end-user, and advice on how to prepare your business for April 2020.
Need some further guidance when it comes to IR35?
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