As most contractors already know, come April 2021 IR35 will look a little different to how it does now. With Private contracts being brought in line with Public contracts, the responsibility for assessing your IR35 status will shift to your end-hirer – taking you out of the equation completely.
So does this mean the end for contractors, or just the beginning of understanding your status on a deeper level to ensure you’re placed correctly ‘inside’ or ‘outside’? In this blog Neil Kellaway, Operations Manager at Intouch explores why if you’re genuinely outside IR35 you have nothing to fear come April 2021.
Old fear vs new ones
The misidentification of Private sector contractors’ IR35 statuses and the potential of being lumped with a hefty tax bill was one of the main concerns, so what will the new rules post April 2021 mean for all contractors? Having your status’ decision completely out of your hands could be seen as a negative…what if your end-hirer gets your status wrong, or worse, applies a blanket ‘inside IR35’ status to all contractors they engage with?
Firstly your best form of defence is to fully understand IR35; what it is, how your position is determined, and what this means from a financial position. Your specialist contractor accountant will be able to run through all of this with you, and a good accountant will have a host of IR35 specific services at your disposal (which should be included in your monthly accounting fee), to ensure you’re kept as safe as possible.
What happens come April 2021?
If you’re currently found outside IR35, you should remain to be so post April 2021. The rules used to determine a contractor’s IR35 status are not changing, simply the responsibility of identifying whether you’re found inside or outside will now lie with your end-hirer post April 2021 (regardless of whether you’re Public or Private). The concern is that lack of preparation and knowledge among Public Sector hirers leading up to this reform could be problematic for contractors, at least in the short term.
So what can you do to aid your end-hirer in applying to the correct status?
Speak to an IR35 accountant who is able to support your status before it’s classified by your end-hirer
Whilst the final decision is out of your hands, there are steps you can take beforehand to help your end-hirer in their decision making process.
Ensure you enlist the services of a specialist contractor accountant who’s able to offer unlimited IR35 reviews, with advice on your contract and working practices in an easy-to-use format that you’re able to provide to your end-hirer, and discuss when considering a new contract.
Here at Intouch, our contracting accountants offer our clients just that, and can even go one step further by offering hirers legal support if they are struggling to apply ‘reasonable care’ when determining your status, which is expected of them by HMRC.
Use a specialist contractor accountant who is actively working to mitigate the IR35 impact on contractors
Accountants aren’t just about tax returns and counting receipts, when it comes to IR35 you need to be sure they’re going the extra mile. At Intouch, our group company Brookson Legal are already actively engaging with Private sector agencies and end-hirers to ensure IR35 rules are being applied correctly, and that the impact on contractors is mitigated.
So you’re not left out in the open hoping your hirer will apply the correct status to your contract.
When it comes to IR35 knowledge is power
As previously mentioned, fully understanding IR35 and finding the right professional services who are able to support you through this period of change are what’s key in surviving the impending IR35 changes. Get in touch today to find out how we can help you.
This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.