Making Sense of IR35 – Webinar for Employers Key Takeaways
Interim Partners recently hosted a webinar which provided an overview of the IR35 off-payroll working rules in the private sector for employers.
Hosted by Iain Pennell, Solutions Director for BrightPool and Fiona Coombe, Director of Legal and Regulatory Research at Staffing Industry Analysts, we discussed the proposed regulation and the associated implications for employers, contractors and suppliers.
Our webinar offered practical advice on preparing for the upcoming changes in IR35 legislation - the content couldn’t have come at a better time with 45% of webinar attendees unclear as to how to start planning ahead for IR35.
You can watch the webinar on-demand here alternatively, if you’re short of time here are some of the key takeaways:
IR35 off-payroll working rules 2020
From 6 April 2020 updated rules* will apply to all public sector bodies and medium and large private sector businesses. Small company hirers are exempt, i.e. those that meet at least two of the Companies Act criteria in a financial year (More than: 50 employees, 10.2m turnover or a balance sheet total £5.1m). If a hirer is affected, they must give a status determination statement to a personal service company (PSC) contractor giving reasons for their conclusion. Failure to comply with the obligation will incur liability for tax & NICs.
Obligations on the client
The client needs to determine employment status according to IR35 common law tests. Once these tests have been completed, the client is required to give a status determination statement (SDS) to the worker. It is Important that clients take reasonable care in reaching the conclusion.
If the worker or “deemed employer” i.e. the fee-payer, make representations that the conclusion is incorrect, the client will need to inform the worker and deemed employer that the conclusion is either correct and provide additional reasons for this, or, give the worker and deemed employer a new SDS with a different conclusion. This is required to be completed within 45 days. Liabilities of the client and obligations on the fee-payer was also discussed during the webinar.
Making IR35 status determination
Check the Employment Status for Tax (CEST) online tool provided by HMRC for the public sector, this service is anonymous, and the tool does not store information. Once the tool has provided a result the client should retain a printed result in addition to supporting evidence. This can be used for a minimum of four years and up to seven years.
When we asked webinar attendees how they currently plan to perform status determination checks, over half of responded that they would be using CEST and CEST plus additional determination tools/processes.
First steps in preparing for April 2020
Firstly, it’s important to understand the legislation and your obligations. Over 60% of webinar attendee didn’t know what impact the change in IR35 legislation would have on their business. Once this is understood, processes and systems can be put in place for making and sending determinations to contractors as well as handling disagreements. The following steps will enable you to start planning in preparation for April 2020.
- Identify PSC contractors and categorise them according to level of importance.
- Determine the status of PSC workers, using the CEST tool or other suitable methods while avoiding ‘blanket’ assessments.
- Keep a record of the evidence used to make the determination and the determination itself, making sure it’s in accordance with GDPR retention policy.
- Decide how to manage existing contractors, including terminating high-risk consultancy contracts prior to April 2020 and ensure that all fees owed prior to 6 April 2020 are paid.
* Draft Finance Bill 2020 Schedule 1 amending Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) Part 2 Chapter 10
Download the Practical Guide to Private Sector Changes in 2020 for Employers or the Practical Guide for Contractors on Private Sector Changes. If you weren’t able to attend but would like to view the recording, you can watch the webinar on-demand here.
Look out for more events and articles on IR35 over the coming months, you can also follow Interim Partners on LinkedIn for more IR35 updates.
If you’d like to discuss how IR35 will affect your future contracting prospects and practices, we’d be happy to help. Get in touch.