As a result of COVID-19 it is suggested that more than half of all contractors in the private sector are yet to obtain any IR35 information from their client. The new off-payroll rules are now only 70 days away and almost 6 out of 10 contractors say end-clients still have not sent them any communication about the new framework – or their position within.
The resources and attention that businesses have placed on avoiding closure and mere survival has led to this lack of communication. However, all signs indicate that the changes to the off-payroll rules are going ahead as scheduled. Regardless of the pandemic’s severity organisations are being told to prepare for reform and are reminded that HMRC is working with stakeholders and contractors to help, advise and guide in relation to rights and responsibilities.
Regardless of additional education and support being advertised, a recent poll of 1400 contractors suggests that only 15% of them have received a Status Determination Statement (SDS) from their end client.
Cue flashbacks to 2017 when the legislation went into the public sector – there was a startling lack of communication between businesses and contractors that contributed to confusion and chaos in subsequent months.
In the coming weeks and months, businesses need to inform contractors of their IR35 reform strategy, without an approach in place it could have a huge impact on a contractor’s tax implications, and firms – with this lack of communication – risk losing them.
There is a growing notion that COVID isn’t the exclusive problem here, but lack of clarity within suitable timeframe could also be to blame. Some commenting that “the situation needed to be fixed from the outset”, as there has been confusion over aspects such as umbrella companies being framed as ‘intermediaries’. The less than adequate leadership approach has not really helped anyone prepare.
But are all of these factors mere excuses for procrastination on IR35 action? I guess we can only speculate.
Regardless of chosen approach, now is not the time to be underprepared for the forthcoming deadline. Contractors should be looking to take matters into their own hands if they have not yet heard from their client. For them, getting answers about their client’s strategy and how it may impact their determination is becoming a necessity – it is their income that is on the line
Not that this is an ultimatum situation, especially given the UK’s current economic climate, but the status of your contracts’ certainly should be coming to the forefront of your mind. For all we know your end client might have a plan in place, but no harm can come from contacting them, addressing your concerns and outlining why it is important that you have an idea of their approach for the incoming changes.
With HMRC confirming that the reform will go ahead, action needs to be taken, but with companies having to contend with Brexit, and a pandemic at the same time you may want to consider prodding them.
Any help we can provide we would be pleased to.