There isn’t a one size fits all approach to the IR35 regulations, especially now that the world of work has changed so much since the turn of the new year. It is definitely a good time to revisit your options ahead of the reform in April 2021. In particular for organisations that are looking to restart halted projects, this is key as your contractors’ circumstances may have now changed in light of the impacts of Covid-19.
We’ve put together some handy advice to help you understand the position of your contractors, and how to demonstrate reasonable care when it comes to the changes brought about – again – by the looming IR35 deadline.
Delays, delays, delays
We’re all working to a new deadline to clarify if our interim workers sit within IR35 or not. The initial implementation of the new regulations was delayed following the pressures placed on the economy and businesses earlier this year, and now we need to get back up to speed on what’s to come.
You should take a step back and review whether the decisions made previously are still correct today. There are a few points to think about here;
• If you’ve taken an individual approach to roles, think about why that is. If, for example, this is due to the location of work, then the impacts of Covid-19 could very well reverse the decision.
• If you have made a blanket decision, then it would be worthwhile to take a more individual approach to your contractors.
Although, amidst the changes, there has been concern raised about the effect the new regulations will have on the flexibility of the market and wider economy at a time when it really needs a boost.
Coronavirus throwing a spanner in the works
Since February, a lot has changed. Not least the shift to working remotely for the global population. As almost a quarter of the UK’s workforce have moved solely to working away from the office, many are facing questions about the tax position of these interim workers.
PwC has called for all firms to review the IR35 status of their contract workforce, as new ways of working have blurred the lines of their status as an employee.
This argument suggests that remote working makes it a lot easier for a business to claim that their contractors are outside of IR35, pushing decisions more in contractors’ favour, potentially enough to reverse decisions made pre-Covid. It’s becoming harder to differentiate as to whether a contractor is inside or outside IR35. For those individuals who, prior to the pandemic, were deemed as ‘borderline cases’ in Status Determination Statements, and uncertainty ruled strong, the impacts of the past few months may help to steer a clearer view of their tax position.
Determining if somebody is a genuine contractor or an employee can be a real headache. It’s important to not get caught out, though. Take the time now, by working internally or liaising with a specialist like us, to help you understand how to follow a robust process and demonstrate reasonable care by producing status determination statements that provide clarity on IR35 status.
Contractors are a vital part of the software engineering community. Our IR35 solution helps you to hire the right talent to facilitate growth whilst mitigating the risk in light of changes to private sector legislation. Get in touch with one of our consultants to learn more.