Contractors have been waiting with baited breath for news of IR35 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 have listened to feedback they received during their consultation earlier in the year and allowed a decent lead time for the Private sector 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. A further 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 implications 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, they 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 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 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 legislative change. 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 clients already benefit from unlimited IR35 support, advice and contract reviews, 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 an accountant with their finger on the pulse of IR35, please talk to us about how we can support you.