Contractors have been waiting with bated breath for news of IR35 legislation reform in the private sector. In his Autumn Budget, Philip Hammond announced that changes will not be rolled out until April 2021.
By far and away the biggest announcement in today’s Budget is the Government’s decision to roll out changes to IR35 in the Private sector in April 2021.
We’re pleased that the Government has listened to feedback they received during their IR35 consultation earlier in the year and allowed a decent lead time for the Private sector and the accountants for contractors therein, to implement this significant change.
It also allows further time for stakeholders to help shape the rules into something more appropriate and fair for contractors than the changes we saw in the Public sector. Further IR35 consultation is expected in the next few months to help shape the precise changes.
The key change taking place in April 2021 is a shift in the responsibility for determining employment status for limited company contractors. But what does it mean for contractors? Well, the key IR35 implications for contractors are likely to be:
- It will no longer be the responsibility of the director of the PSC to determine their IR35 status. This will become the responsibility of the end hirer (client), but only where the end hirer is a large or medium sized business (this is yet to be defined).
- The actual method by which status is assessed is not changing, so if a contractor is legitimately outside IR35 today, the result of their HMRC test should continue to be outside IR35 post April 2021.
- The end hirer will need to exercise “reasonable care” when determining the IR35 position of any contractors engaged via a PSC; so it’s clear that blanket bans on the use of PSCs or blanket IR35 assessments should be avoided and that professional advice from specialist contractor accountancy services would be recommended.
It’s this call for ‘reasonable care’, and the fact that the Private sector will be keen not to hold up key projects by alienating their flexible workforce that stands the savvy contractor in good stead. End hirers and recruitment businesses who continue to support genuinely self-employed contractors stand to benefit significantly from this change, whilst those who are unable or unwilling to manage their new obligations could face serious commercial implications.
As part of the Brookson Group, Intouch’s contractor accountants already engage with a number of end hirers and recruitment organisations who are all motivated to understand how to support their flexible workforce through this change to IR35 legislation. The announcement of a ‘go live’ date for the changes will allow us to strengthen these relationships, and it’s this ability to influence up the supply chain that puts Intouch in a uniquely strong position to support contractors in their contracting journey.
Intouch contractor accounting services already include unlimited free IR35 reviews, support and advice and will be provided with all the evidence needed should their status be challenged. The key message to our contractors is; don’t panic! If your contract is legitimately outside of IR35 now, you should continue to be so after April 2021, and if you need help in proving that, let us know.
If you’re not an Intouch client but would like to work with a specialist IR35 accountant with their finger on the pulse of IR35 legislation changes, please talk to us about how we can support you.