The Governments consultation into the reforms of IR35 in the private sector closed last week and businesses, accountants, lawyers and contractors are eagerly awaiting their publication.
The IR35 reforms will apply from April 2020 to all companies in the private sector (the public sector amendments were made in 2017) whose turnover is over £10.2m or have over 50 employees. The employer will be required to assess the employment status of any contractor the organization uses.
The IR35 rules were put in place by HRMC to tackle perceived tax avoidance by contractors using limited company structures to avoid paying employee taxes on engagements which should have been taxes as employment relationships. The IR35 legislation has been controversial from implementation with many experts considering it not fit for purpose and ambagious which has resulted in numerous legal cases.
We are now getting nearer the implementation date for employers and agencies, so they need to have a plan for its implementation within their organization or the uncertainty may create a problem within their businesses.
Each contractor hire, must be considered individually, lessons learned from the public sector implementation is that blanket assessments, whist being in direct contravention of the governments intention, did happen, and organizations did suffer with contractor recruitment and retention until the blanked assessments stopped and each case was assessed on an individual basis.