Despite many hoping for a late Budget, the Treasury announced last week it would be going ahead on Monday 29th October. It’s expected that with the Budget held on this date, the government could declare the commencement of the IR35 reforms for the private sector from April 2019. In turn, this would prompt questions as to how soon workers and organisations could prepare for it.
We saw a similar story back in 2017 with reform for the public sector. The lack of preparation time led to a host of problems.
- Case defeats for HMRC.
- Questions surrounding the reliability of its IR35 online Check Employment Status for Tax (CEST) tool.
- End-clients refusing to engage with PSCs altogether.
Memories of those problems have cultivated much concern about the private sector rollout. Some argue the reform should be put on hold.
While stakeholders are likely to continue making a case against an April 2019 introduction, it’s crucial to be ready. The good news is that there are many lessons from the public sector reforms.
There’s a reason why there’s still confusion in the public sector; IR35 is hugely complicated. The first port of call for establishing your status should be HMRC’s CEST tool, but it’s been heavily criticised from the start for producing inaccurate results. While there’s no legal requirement to use CEST, a client or agency may insist on it. This will force contractors to act upon the results. Additionally, HMRC has stated it will stand by the result it produces, meaning its critical to use CEST now. It will help you establish whether you need to take action for your working practices or contracts to achieve the right result.
Additionally, limited company contractors should seek out a compliant IR35 specialist to provide both an ‘inside’ and ‘outside’ assessment. A specialist can explain the reasons for the assessment and recommend the right action you need to take. This is particularly important if it’s revealed that you should be working ‘inside’ IR35. You may be vulnerable to HMRC investigation if it comes out after an assessment.
Contractors provide considerable value to organisations, whether that’s through offering skills employees lack or helping to deliver business-critical projects. However, engaging cost-effective contractors may become more challenging if an organisation hasn’t made the right preparations for the IR35 reforms.
The obvious place to start is by checking the systems and processes your organisation has in place when it comes to engaging contractors. Streamlining these processes now will help you avoid potential problems when the reform does eventually come into effect, enabling you to continue accessing the right workers in the most efficient and compliant manner.
Follow the Mango Pay blog for the latest news and updates related to IR35 as they happen.