How UK businesses should prepare for incoming IR35 rules

Around 170,000 individuals are expected to be affected by IR35 being extended to the private sector next April.

Chris Cook outlines how businesses in the UK should prepare for IR35, so they don’t fall foul of the rules with smallbusiness.co.uk

With less than 12 months to go until the IR35 changes come into force for the private sector, it is important that companies who engage contractors through personal service companies (PSCs) understand what practical steps they can take now to prepare in advance.

With the IR35 rules being reformed within the private sector from April 2020 (essentially mirroring the changes introduced to the public sector back in April 2017), there is a great deal of uncertainty, not only about how the rules will work, but also how the engaging business (“the company”) will practically operate the new legislation.

What are the IR35 changes for the private sector?

The IR35 reform will shift the onus for determining whether a freelance contractor is truly freelance or a full-time employee to the company who pays the personal service company, either directly or (if they are involved) via a recruitment business. HMRC is on the lookout for what it considers “disguised employment”.

How to prepare for IR35

  1. Contact current PSCs
  2. Review documentation and evidence
  3. Implement processes and procedures
  4. Understand who is liable if tax and NICs are not paid
  5. Recognise exemptions from IR35 rules

For more detail on how to prepare for IR35 read the full article by Chris Cook published by smallbusiness.co.uk

CONTACT BETH

If you would like more information or advice relating to this article or an Employment law matter, please do not hesitate to contact Beth Leng 01727 798046.

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