With less than 6 months to go before the IR35 rules change in April 2020, medium and large organisations who engage contractors through their own intermediary (such as a PSC - personal service company) should be taking steps now to:
- assess the workforce who are off-payroll
- review and a make status determination for each off payroll contractor using reasonable care
- Establish a status determination disagreement process (in line with minimum requirements)
- Review internal processes so that if the organisation is the Fee-Payer and the contractor is assessed as falling within the IR35 rules, they are prepared for:
- calculating the deemed direct payment
- deducting tax and employee national insurance
- reporting and paying the required tax and NICs (including employer's NICs)
- apprenticeship levy (if applicable).
It should be noted that the IR35 tests established by case law are not changing. What is changing is that the responsibility for making employment status determinations is moving up the chain from the PSC to the End User, who will take more risk if they are also the Fee Payer in the supply chain.
As the Conservatives, Labour and Liberal Democrats start to tell the public details about their manifesto so have the Recruitment and Employment Confederation (REC) and the Association of Independent Professionals and the Self-Employed (IPSE), with one calling for a delay to IR35 and the other calling to scrap it.