Arguably one of the most significant changes in IR35 legislation was set to take effect earlier this month however was delayed until April 2021 due to COVID-19. The change was set to see a shift in responsibility, from contractor to client, to assess whether a contractor hired should fall inside IR35 regulations.
IR35, often referred to as ‘off-payroll working regulations’ came into effect in 2000 with the intent to prevent workers from avoiding tax requirements and historically has been a contractor responsibility to ensure they are meeting the correct tax requirements.
There are various ways to test whether IR35 regulations apply to an individual. These include
- Mutuality of Obligation – is there an obligation for a client to provide work and for the worker to accept such work?
- Control – is there an element of control in the relationship between client and worker such as when and where the worker carries out work?
- Substitution – is the worker required to carry out the work themselves or are the able to send a substitute to carry out the work?
If a worker does not have the freedoms discussed above, they will fall under IR35 regulations and may be classed as an employee.
As a contractor you may wish to assess yourself to determine where you fall. You may decide to be proactive and research the legislation changes to see how you may be affected by the rules. Should you decide you fall under IR35 it may be necessary to change any non-compliant behaviors you may show and demonstrate such changes to any clients you engage with.
As an employer it is essential to be proactive and prepare for the changes ahead by carrying out an audit on any current contractors to check their worker status. If you require any help with auditing, V3 Recruitment may be able to help you. We can carry out a “health check” of your business to check the employment status of your workers and assist in the next steps to ensure you are protected from HMRC scrutiny. Call our team on 02393 911111 for more information.