With 6th April 2020 approaching, the date on which IR35 reform in the private sector will be introduced, IR35 specialist, Qdos, has advised recruitment agencies that they should not expect to be treated any differently to contractors by HMRC. Changes to the IR35 legislation will be introduced in the private sector next April and will result in medium and large companies becoming responsible for determining the IR35 status of the contractors they engage.
Recruitment agencies handling payments to the contractors they place with these companies will often carry the IR35 liability, which can run into hundreds of thousands if not well over £1 million. Similar changes were enforced in the public sector in 2017 but apply to recruiters placing contractors in all public sector bodies.
“HMRC’s approach towards enforcing IR35 compliance in recent years suggests that the tax office will not go easy on recruitment agencies, just as it has aggressively targetted contractors in the past,’ says Seb Maley, Qdos CEO. “It’s no secret that HMRC is under pressure to raise tax revenues, which has resulted in compliant contractors being unfairly pursued by the tax office, that has won just one IR35 tribunal outright in the fourteen it has been involved in this decade. With many recruiters set to carry the IR35 liability from next April, our advice to agencies is not to assume to be treated any differently.
“While IR35 certainly poses various challenges to recruiters, who will be exposed to risk, that’s not to say these changes cannot be managed,” Maley added. “Through IR35 insurance, education and by helping companies make well-informed IR35 assessments, recruitment agencies will be in a position to protect themselves.”