Help me! I’m turning into an IR35 geek! I’m not sure how it happened, but somewhere between rolling my eyes at the HMRC website
and debating case studies in our seminars last week I’m hooked! This won’t come as a surprise to anyone that worked with me throughout the GDPR roll out - I do have a tendency to get excited about deadline driven chaos and government grey areas.
Talking to clients last week, two things struck me; firstly, I suspect that some companies haven’t identified the potential impact to them. The delay and current uncertainty with regards to roll out has potentially allowed us to let this drift. Secondly, I also suspect that we haven’t got a clear idea on who it will impact. Our clients had lots of specific questions last week and with each case being so different, it really is incredibly tricky (and risky) to apply a single rule.
I know that there are many reasons ‘as to why’ this might not be front of mind right now. Deciding who to vote for in the general election, preparing for Brexit and of course Christmas shut down are all taking top priorities. However, here are five things that I think will help you prepare:
- Double check if it is applicable to you, some smaller businesses are being excluded. During a 12-month period, a business is deemed to be a ‘small’ company if it meets 2 or more of the following criteria: turnover – not more than £10.2 million, balance sheet total – not more than 5.1 million, number of employees – no more than 50 (if this is you, you can stop reading now)
- Find out who in the organisation is taking a lead on it? Some businesses are well ahead and have a clear plan already. You may find that they have partnered with specialists such as Brookson Legal and that you can simply follow the process. If not, check with the legal, finance and HR teams. Even though it may not be up to you to lead the work, if it is likely to impact your team it’s best to be involved in the decision making.
- Find out how many contractors you have and how they are currently being paid. Sounds basic, but in some organisations it can be difficult to determine exactly how many workers may be impacted by the changes. Consider any temps, freelancers and think about regional offices where temporary recruitment may not be dealt with centrally. If they are already being paid PAYE or as sole traders, then this won’t affect them. If they have LTD company or a PSC then it will – even if they are being paid by an agency.
- Start a RAG (red, amber, green) review of consultants, green for those you could replace easily as a low cost to the business and red if you really can’t lose them. To keep hold of that red talent you may need to be prepared to offer them a permanent contract and/or pay rise to avoid them losing out financially.
- Educate line managers and hiring managers. Make a map of impacted areas and introduce them to IR35. We have blogs and webinar recordings you could share as an introduction and we are happy to run through the presentation from the seminars on either a call or we can pop in to see you. Speak to your internal comms team, you may need multiple stages for the communications to make sure it makes sense and changes behaviour.
We are expecting to see the final legislation in January, so will know more then. The off-working rule remains the same, it is the control and liability that has shifted to the business rather than the contractor. It will be up to you to decide if the role is ‘inside’ or ‘outside’ IR35 and carry the liability for the tax implications.
I sincerely hope that the impact to you is minimal, but preparation now could save you from being caught out in April. Please get in touch with me or your consultant
if you have any questions.
What do you think? Will you be impacted? Do you have any tips or advice - any thoughts on my top five??