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What You Need to Do About IR35

May 2019

IR35 is a piece of tax legislation designed to combat tax avoidance by off-payroll workers who provide their services to businesses as a self-employed individual on a regular, long-term basis. In the eyes of HMRC, workers of this kind are what’s known as ‘disguised employees.’ This means that as far as HMRC are concerned, the worker should be taxed the same way that a permanent employee is.

On 6th April 2017, the responsibility for determining IR35 status shifted from the limited company contractors to the public sector end users. Then, during the Autumn Budget 2018, it was announced that these rules will be extended to the private sector too. The reform is set to take place from April 2020.

Having said that, some businesses are already receiving letters from HMRC regarding IR35. The letters look something like this:

Letter from HMRC Regarding IR35This means that the onus will now be on the end user (the company receiving the services of the worker), to determine the off-payroll workers IR35 status. With just over a year to go, now is the time to start checking the status of your workforce.

We can help. We have been busy advising and supporting our clients to help prepare them for the upcoming changes to IR35. We can support our clients from the moment they receive a letter from HMRC right up until a fair and pragmatic solution is found.

Here are some of our top tips to help get you prepared for the IR35 reform:

What to do if you are an end user

What to do if you’re a contractor

Until April 2020, contractors are still responsible for determining their own IR35 status, so it is still advisable that you continue to assess your own status with contract reviews.

If you need advice and support on getting ready for these changes, then please contact us for a free IR35 consultation.

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