There’s not long to go until IR35 changes, so we’ve pulled together 3 steps you need to take to prepare for IR35 changes.
From 2021, IR35 status determination will become the responsibility of the end client/hirer and will be passed down through the supply chain to the contractor. From here, tax liability will lie with the “fee payer” – generally a recruitment agency – who must deduct tax and national insurance contributions and report using Real Time Information (RTI).
With HMRC estimating that owed taxes may reach 1.2 billion by 2023, not to mention the risk to your business’ reputation for non-compliance, it is vital that businesses prepare for IR35 in order to transition smoothly and mitigate all risk. But, how do businesses prepare for IR35 changes?
Do you currently work with limited company contractors? How will the IR35 changes impact your business processes?
Understanding the IR35 changes and how they will implicate your business is the first step to achieving compliance. Take a look at your existing businesses practices surrounding contractors and IR35 and assess how these will need to change and when. This way you can outline the steps you need to take to comply whilst considering the cost, time and resources you will need.
IR35 changes can be daunting for businesses and preparing for these independently can cause a lot of worries, expense, and time that, quite frankly, businesses can’t afford. Alternatively, rolling out a blanket approach to save you time and money in the short term is also an ineffective method of preparing for IR35 changes. In the long term, a blanket approach will see you lose your top talent, damage your reputation, result in a 13.8% increase in cost to clients, and open contractors up to historic HMRC investigations.
Instead, businesses need to use an insurance backed IR35 determination/fee payer service that can mitigate all risk to the entire supply chain, allowing you to maintain your top talent while taking the stress, expense, and worry out of IR35 changes.
As the IR35 changes approach, we are seeing an increasing decline in contracting talent as businesses either turn to blanket approaches or fail to clarify their IR35 approach.
By informing your contactors early on that you are using an insurance backed IR35 service that will even provide personal protection insurance for the contractor in the event of any HMRC investigation, you are more likely to retain your top talent as they feel valued and reassured by your IR35 preparations. As such your business can maintain a competitive edge in your marketplace, all the while complying with IR35 legislation changes.
For more help preparing for IR35 changes, please don’t hesitate to contact our team. Using our bespoke IR35 determination/fee payer service we can help you comply with IR35 changes whilst mitigating all risk to your supply chain.
Optimus Shield is the result of heavily invested research and development to tackle the issues now facing the private sector due to changes to the IR35 legislation being rolled out in April 2021.