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IR35 Legislation - Compliance Services

IR35 Legislation - Compliance Services

Navigating the impact of IR35 in the private sector.

In consideration of the global pandemic, the government has announced that the reform to off-payroll working rules, in the private sector (IR35), would be delayed for one year from 6 April 2020 until 6 April 2021 as part of the package of support for businesses and individuals to manage the economic impacts of Covid-19.


IR35 legislation, and how it affects your business.

Before you prepare your business, you really need to understand what IR35 is and how this legislation will impact you. 
IR35 (otherwise known as off payroll working) is a highly complex piece of legislation, underpinned by years of case-law since it was introduced in 2000.

So, what is IR35?
Essentially IR35 is tax legislation that is designed to combat tax avoidance by workers supplying their services to clients via an intermediary, such as a PSC, but who would be an employee for tax purposes if the intermediary was not used.

The legislation will have a significant impact on the way organisations engage contingent resource operating through an intermediary (PSC or LTD company) both in the future and impacting existing worker populations.

If a role / worker is deemed inside IR35, then the fee payer (the party who pays the PSC) must account for PAYE and employee’s National Insurance (NICs) from the workers gross rate, and pay this to HMRC as well as accounting for employers National Insurance contributions.

Key Changes to Consider.

The legislation moves the responsibility for assessing the IR35 status from the contractor to the “end hirer”. 
  Is this you? How will you conduct these assessments?

- Assessments must be made using appropriate tax assessment tools. 
  Do you know what tool you will be using, CEST or an alternative?

- The End hirer must inform the PSC and fee payer (the party who pays the PSC) if the role is inside or outside IR35 as well as the individual supplied by the PSC.
  Do you have the processes in place to make this happen?

- The End hirer must take “reasonable care” in making the determination.
   Are you comfortable that your processes demonstrate this?

- Failure to provide the determination to the fee payer means the end hirer is liable for the PAYE deductions.  What controls do you have in place to ensure that this won’t happen?

- The End Hirer must implement a “Client Led Disagreement Process” (disputes process) so that contractors can challenge assessments if they do not feel it is fair. The outcome must be passed to the individual supplied by the PSC.
Have you defined how this process will work for your organisation yet?


Risk to Consider.
Failure to comply with the legislation would result in significant financial risk to your organisation!

 - As the End hirer, you would be liable where you have deemed a worker is outside of IR35, but haven’t taken reasonable steps to reach this decision.

- Reputational damage for your organisation of getting it wrong.

- The first agency in the supply chain faces risk if any other party down the supply chain fails to process payments compliantly, but subsequently cannot pay their own liability.

Resources for Talent & Procurement Leaders.

Roadmap to Success.
Whether you're interested in the comprehensive support we offer (learn more by clicking the "Download" button), or you're going it alone, this Roadmap will help you signpost the steps required and key decisions that need to be made ahead of the IR35 legislation updates.​


Working Practice Indicators.
To determine if a role is inside IR35, requires close reference to the interpretation and application of legislation and case-law. Below are some of the indicators of working practices you may wish to consider as part of your IR35 strategy.


Let our experts help.

AMS IR35 Solutions 2020 PNG

Is your business ready for IR35?

AMS worked in partnership with our Clients and contractors to ensure we were all prepared for April 2020 and remain committed in supporting both in light of the postponement. 

AMS remains committed to offering our IR35 propositions in both the Public and Private Sectors, both now and as you prepare for the April 2021 reform.

Need support or want to know more?
Download our solutions overview. AMS can help your organisation manage IR35 or your readiness for IR35, contact our OPW team (OPWsupport@alexmann.com) to learn more.


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