Did you know new IR35 legislation is arriving in April? Steven Fraser, partner and head of payroll and employment taxes at Anderson Anderson & Brown (AAB), discusses some of the vital points businesses should consider and act upon before the end of 2020.
As we edge closer to April 2021 when the private sector will be hit with new IR35 legislation, pushing responsibilities for contractor assessments and deduction of tax up the contractual chain, it is now time for businesses to dust off their IR35 plans from earlier this year when the original implementation date was April 2020.
Businesses should ensure they have robust procedures in place to deal with the changes and the additional requirements IR35 legislation brings, but they should also ensure internal teams are provided with the appropriate training to apply the legislation going forward.
Over the summer months a vast number of businesses scaled back both their contractor and employee workforce as a result of the impact COVID-19 had on operations but we are now starting to see businesses pick up again with some choosing to engage with contractors rather than taking on the obligations of employees.
While this may seem like an easy option now, it might not be the case early next year when April 2021 rolls round. There are still some questions in the market about what to do, how it is done and who does it.
There are a number of vital points businesses should consider and act on before the end of 2020. Firstly, review your current working practices and arrangements – has the pandemic had an impact on them and blurred the line between employees and contractors?
Also assess current supply chains to identify responsibilities – can the end user be identified and do they have the relevant information to complete your contractor assessments?
Take time to refresh your internal team’s knowledge of the changes – having a team that can accurately and efficiently apply the changes is the key to success.
Formalise and action the plans for completing assessments – while HMRC say they will stand by their Check Employment Status for Tax (CEST) tool, it can often return an inconclusive result so a back-up must be in place for businesses choosing to use this tool.
In cases where you are the fee payer, roll-out plans for processing inside IR35 contractor payments to ensure the relevant liabilities are paid to HMRC on time. Contractors tend to have 30-day payment periods, however this may need to change to work for payroll.
Finally, assess the business risk under the Corporate Criminal Offence (COO) legislation – are you comfortable that your staff who are dealing with IR35 understand the connection and risk, or, is there a training requirement to support the work required?
While training and development may not jump out as a key action point for the implementation of this legislation, it is key for the success and compliance of all business sizes and types, including where elements of IR35 obligations are outsourced.
Anderson Anderson & Brown’s dedicated team can help identify and implement bespoke IR35 plans and the assist in the delivery of training to staff on the new legislation and the impact across all sizes and types of businesses.
Find out more about how Anderson Anderson & Brown can help your business, here.
