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Successfully navigate IR35 with our insights
Explore our IR35 resources to understand how the changes in legislation can impact you, both as a business and as a contractor.
INFORM YOUR APPROACH TO IR35
What is IR35? Reforms to IR35 legislation, which came into force in April 2017 for the public sector, passed the responsibility for determining the tax status of all personal service company (PSC) interim workers to the hiring organisation, including potential liability for tax and national insurance contributions. In the Autumn 2018 budget, it was confirmed that the legislation would be extended to the private sector in April 2020, for large and medium-sized organisations. However, due to the coronavirus pandemic, this didn’t come into force until April 2021. What to do moving forward Now the reforms have been implemented, businesses engaging contractors who have been affected by the change in legislation should be taking steps to ensure they can continue to engage with the talent they need. Our experience working with both the public and private sectors to mitigate potential risk from IR35 makes us the ideal partner to support and guide your talent management strategies. Get in touch with your expert Hays consultant to find out more. Talk to us
UNDERSTAND THE REFORMS TO IR35 LEGISLATION
The reforms to IR35 legislation could leave you open to extra expense and fines if you fail to comply. Our fact sheet provides essential information about how you can approach the changes and continue to secure top contractors.
If you’re a contractor affected by the reforms to IR35 legislation, our fact sheet includes further details about what the changes mean for you and how you can continue to secure the best opportunities.
Managing limited company contractors can be complex, so we have partnered with leading firm Travers Smith LLP to create this quick guide on what you should and shouldn’t do when managing contractors.
Prior to the reforms, we hosted a number of webinars to help engagers and contractors to understand the changes, how they could be impacted, and how best to navigate the updated legislation. Take a look at the recordings for further information.
IR35 WHAT YOU NEED TO KNOW
Chances are your organisation relies on contractors. It’s commonplace in the industry – whether from time to time or more regularly. The reforms to IR35 legislation affect your relationship with a certain type of contractor – someone operating as a personal services company (PSC).
The changes have shifted responsibility for determining the tax status of a PSC from the contractor to an organisation. This means it’s up to your organisation to make the call on whether the assignment sits inside or outside of IR35.
If the assignment with a contractor is deemed to be ‘outside’ or ‘out-of-scope’ of IR35, this is the same as self-employment and PAYE is not required, so the gross payment goes to the PSC. Conversely, an assignment that is ‘inside’ or ‘in-scope’ of IR35 means there’s an employer/employee relationship present so you’ll need to pay PAYE, as well as other employment taxes.
No, not all contractors that you may engage with are affected by IR35 legislation. The only contractors you will need to determine the tax status of are those who operate via a personal service company (PSC). In addition, the legislation reforms only apply to large or medium sized organisations, so if you’re a small organisation you won’t be affected.
If you don’t have the right processes in place to determine the tax status of a PSC worker, you choose to ban PSCs altogether or apply a blanket in-scope determination approach, your organisation runs into several risks.
This includes potential cost increases due to PAYE inflation, the loss of key talent, delayed projects and not being regarded as a ‘destination of choice’ for contractors. In a competitive market, you just can’t run these risks and have projects not being completed.
To maintain your access to contractors, you could consider testing on an assignment-by-assignment basis. This is the primary way to meet the reform requirements, achieve governance, allow you to continue to access skilled specialists and it will give you the edge over other organisations who may be applying a blanket in-scope determination approach.
However, it can be time and labour intensive to put the right processes in place and to continue managing them.
Alternatively, you could look at how you procure services, such as project outsourcing via a MSP and considering our transformation solutions. This approach can help ensure project delivery. However, it won’t be suitable for all projects and can be more expensive than using contingent labour. No matter how you decide to approach the reforms, we can help.
