Insights Are you IR35 aware and ready?

While some were hoping that today’s budget might bring forth a delay to the new Off Payroll Working rules (otherwise known as IR35), the Chancellor’s speech has come and gone and the launch of the new rules seemingly remains on target for 6 April 2021.

The new IR35 rules had originally been due to come into force last year on 6 April 2020 but were delayed for 12 months as a result of the Covid-19 outbreak.  A further delay at this stage now seems very unlikely.

The rules will require medium and large private sector businesses to take responsibility for determining the correct tax status of any freelancers they engage via personal service companies.  In cases where the tax status is determined to be one of ‘deemed employment’, the end-user business will be responsible for ensuring the appropriate tax and national insurance deductions are made.

When the rules were due to be enacted last year, HMRC had indicated there would be a soft launch to ease businesses into the new requirements.  Given the last 12 months we have all had and the fact that Covid-19 is still a very real and present threat, HMRC may well be inclined to take a similarly relaxed approach in this coming tax year.  However, this is far from certain, and it’s possible HMRC will expect much more now from employers on the basis that there has should have been sufficient time to prepare for the new rules.

If your business regularly engages freelancers via personal service company/loan out arrangements, it’s important you are across the new requirements and have the necessary arrangements in place before April.  At the very least, we would recommend the following actions to the extent you haven’t implemented these already:

  • Review and update your template freelancer agreements;
  • Ensure you have appropriate procedures in place to carry out and communicate the necessary status determinations; and
  • Adopt a status dispute procedure for dealing with any disputes that arise from the determination process.

We are very happy to advise in further detail on any or all of the above.  We have also recently been delivering a number of online IR35 workshops for clients so if you are interested in such a session for your business please let us know.

We’ve also created IR35 Manager specifically for media and tech businesses.  This resource combines our experience of the media industry with our legal expertise to produce a comprehensive solution to your status determinations that you can rely on. Read more here.