Contractors across the UK are finding themselves in a strange position when it comes to IR35.
We wrote a warning in April this year that, even during the height of the Coronavirus pandemic, contractors and companies still had to make sure they were IR35 compliant by April 2021.
Amidst the outbreak of Covid-19, though, and the mounds of legislation passed through parliament focusing on economic relief, that message seems to have been lost or passed many others by.
IR35 is still very much alive. As measures such as the furlough scheme, business grants and others made their way through parliament, so did the Finance Bill on 19 May.
The bill was voted through without division, meaning that an amendment by Conservative MP David Davis to delay IR35 until 2023/24 was effectively overlooked.
That makes it official – IR35 will be implemented from 6 April 2021, and contractors and companies that work with them across the public and private sector need to be IR35 compliant by then.
There may still be the chance for the odd tweak to IR35. Those with experience of IR35 had until the end of 1 June 2020 to respond to the Finance Bill’s call for evidence on provisions to reform it.
Contractors could anonymously email Parliament to underline how IR35 had hit their working lives, and suggest ideas for reform. Whether any changes are actually made remains to be seen.
IR35 is here to stay
It’s fair to assume though that with the Finance Bill being passed without division, that any changes that would be made would be minor or negligible to these new IR35 reforms.
In short, IR35 is here to stay, and the private sector needs to be ready for the reforms, come what may.
So, what do contractors and companies need to get right before April 2021?
Before 6 April 2021, contractors will still assess their own IR35 status when engaging with medium- and large-sized private sector businesses.
Until then, they will have to state if they provide their services as a self-employed worker outside of IR35 legislation, or in a way that reflects employment status (inside IR35).
That responsibility will fall on private sector companies from 6 April 2021, and the liability will also shift to the party who pays the contractor.
Contractors, though, do not have to accept being placed inside IR35 by their client for now – only after 6 April 2021.
Confusing? It can be for both contractors and private sector companies, which is why there has been such fierce opposition to IR35 reforms.
Get it wrong and contractors and companies can be liable to pay back taxes and other penalties. There have also been claims that the Government’s IR35 tax status checker tool isn’t reliable.
Greatpay is here to help contractors through the IR35 confusion and help them reach compliance.
Our friendly specialists have vast experience with IR35 legislation and are able to help contractors become compliant before IR35 reforms are implemented in April 2021.We want to help people through this confusing time. It’s the Greatpay way! Our team is available outside typical office hours – contact us today to find out more about how IR35 could affect you.