The rules shift responsibility for determining an individual contractor’s employment status for tax purposes away from the contractor to the organisation engaging them.
Crucially, if an organisation finds that a contractor is caught by IR35, this will fundamentally alter the existing relationship between the parties from a tax perspective and the organisation will need to take action to remain compliant.
To help HR professionals understand and prepare for the changes, XpertHR is hosting a ‘What HR needs to know’ webinar on 26th February 2021.
Jeya Thiruchelvam, Managing Editor, Employment Law at XpertHR will present the session, with payroll consultant and lecturer, Kate Upcraft, explaining how the IR35 reforms will affect organisations and the practical steps HR professionals need to take to ensure that they remain compliant with the law and manage any additional liabilities.
A survey of 3,320 contractors in December by assessment tool IR35 Shield[i] found 52% of in-work contractors are yet to be assessed, with 23% saying their client had imposed a blanket ban on PSCs (personal services companies).
Many contractors also expressed uncertainty over the future of their engagement with a client with just 32% saying for certain that they will remain with their current client beyond April 2021, and just over half (51%) unsure of where they will be after April 2021. Employers could find they have resourcing gaps if they can’t access contractors so easily.
In the webinar, Kate will cover some of the key issues around IR35 including:
- What are the IR35/off-payroll reforms?
- What is changing on 6 April 2021?
- What are the consequences of IR35 and the reforms for organisations that engage individual contractors in this way?
- How can organisations prepare for the reforms?
- Is there anything that organisations can do to protect themselves from additional liabilities?
- How do you process invoices through the payroll for a contractor who is deemed to be caught by off-payroll working?
Jeya Thiruchelvam added, “IR35 is causing considerable confusion – to start with the very separation of a person's employment status for tax purposes from their employment status for the purposes of employment protection rights (such as the right to maternity leave and pay or the right to request flexible working) throws a lot of people.
“Then the terminology of IR35 – contractor, engager, fee-payer, personal service company is also creating confusion. However, it’s crucial that organisations get to grips with all of this because non-compliance will expose them to additional tax liabilities.”
XpertHR offers HR professionals a number of resources around IR35, including model letters around the determination and appeal process:
- IR35: Letter providing individual with status determination statement
- IR35: Letter allowing individual's appeal against status determination
- IR35: Letter rejecting individual's appeal against status determination
To register for the webinar on Friday 26th February 2021 at 11am and submit questions to the speaker, please click here.
For more information on XpertHR visit: www.xperthr.co.uk
[i] https://www.ir35shield.co.uk/Files/IR35Shield_Contractor_Survey_2021.pdf