Be Prepared for IR35
Key Contact: Claire Knowles
Author: Rebecca Mahon
All sorts of things have had to be postponed this year. Sporting events, weddings, and, yes, IR35 reform. Previously scheduled to come into force on 6 April 2020, legislative reform of the off payroll working rules, also known as IR35, was delayed due to uncertainty and disruption caused in the early months of the Coronavirus pandemic. Alas, despite efforts by some MPs to delay it even further, the proposed IR35 reform will come into effect on 6 April 2021 and Acuity are here to help you prepare.
What is IR35?
IR35 is HMRC’s tax avoidance legislation for Individuals being paid for their services to an End-Client through an Intermediary. Since its introduction in 2000, IR35 has meant that End-Clients bear the responsibility for PAYE deductions when making payments to Intermediaries if the Individual providing the services is deemed to have employee status for tax purposes. So IR35 is nothing new, but what is new is that from 6 April 2021 the End-Client will be responsible for determining whether the Individual should be deemed to have employment status, notwithstanding the presence of an Intermediary.
What does my business need to do to prepare for IR35?
Though all businesses should always be vigilant to tax avoidance, the actual obligations imposed by the IR35 reform do not affect all End-Clients. Similar reform was brought into force in 2017 for the public sector and from 6 April 2021 these rules will see some amendments as well as capturing medium and large private sector businesses. If your business is caught, it will then need to assess whether the any Individuals provide their services through an Intermediary and whether these Intermediaries are caught by IR35’s ‘material interest’ test. If both the End-Client and the Intermediary are within the IR35 scope the obligations on the End-Client to determine the Individual’s employment status kick in and they will need to communicate the outcome accordingly by way of a ‘Status Determination Statement’.
How can we help?
Here at Acuity, we have been prepared for IR35 reform for about a year now, so 6 April 2020 was rather anti-climactic for us. It does mean, however, that we have everything ready to help clients understand and prepare for the upcoming changes. Our IR35 Assist solution provides end to end support, providing you with the expertise needed to comply with new legislation. In response to HMRC’s flawed and widely criticised IR35 tool ‘CEST’, we have created our own assessment tool to help End-Clients comply with their obligations with simple and reliable status determination tests. Our experts can help you implement and manage required changes while providing training and learning resources to ensure a smooth transition and lasting compliance. It is never too early to be prepared and we at Acuity are ready to assist. For more information on our IR35 Assist solution please visit our IR35 Assist page here or contact our employment team.