Prepare for April 2021

Carl Henning of Brookson looks at IR35 in the Private Sector

Wording for the legislative changes required to make Hirers responsible for IR35 from April 2021, has been published online and there are no changes or surprises for businesses.

The key obligations remain untouched:

  • 6 April 2021 commencement (postponed from April 2020 due to COVID-19);
  • No changes for contractors engaged with small businesses where the contractor continues to carry the risks and compliance obligations for IR35;
  • IR35 applies to public sector, medium and large businesses;
  • Small business tests remain unchanged (turnover, balance sheet, employee numbers);
  • Status Determination Statements (SDSs) are still required for the supply chain;
  • The ‘fee payer’ risk (I.e. the obligation to deduct PAYE before paying the contractor) travels through the recruitment supply chain with the SDS;
  • Contractors and Agencies can raise a challenge to the Hirer’s SDS; and
  • Hirers have 45 days to respond to the challenge, providing reasons for their final decision.

Hirers have been given additional time to get their house in order, which may have an impact on the ‘soft landing’ previously available to businesses. HMRC are using this period to ‘educate and support’ Hirers, so the same is unlikely to be seen as necessary after 6 April 2021.

Hirers therefore need prepare for enforcement of the law immediately following 6 April 2021. So now is the time to stay up to date; refine your IR35 processes and continue to assess your workforce. Build on your knowledge from the last 12 months or so.

There will be some contractors who are borderline when assessed using various methods. Brookson Legal can help you to understand your options to clarify the status of such contractors and support your processes in this regard.

In some other cases businesses actually need to make a start on their IR35 journey… better late than never!  Brookson Legal uses its best asset (people) to support businesses to assess their contractor workforce and understand options available to help to retain essential contractor resource, whilst complying with the IR35 obligations.

Recruiters remain an essential part of the supply chain; but they often don’t hold the necessary information to assess the IR35 status of contractors. Working alongside Brookson Legal will ensure that recruiters continue to offer support to implement changes to contractor engagements in light of the IR35 changes, whilst Brookson Legal provides the ‘muscle’ to ensure the right IR35 status is consistently applied with information from the Hirer.

Brookson Legal offer more than just an IR35 Review Service. Our deep understanding of the law in this area, along with the wider commercial implications mean that we can advise and support Hirers beyond the initial status review.

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