Changes in the IR35 legislation will soon come into effect. All businesses must ensure they have fully assessed their contractors to identify whether they fall inside or outside the IR35 regulations.
How your business approaches its IR35 responsibilities should be streamlined as much as possible to ensure the process is efficient. Businesses and organisations with many contractors may need substantial resources to determine the IR35 status of individuals.
Here at IC Resources, we have put together a simple 5-step process to help you get ready for the IR35 legislation changes on April 6th.
Step 1: Audit
Carry out an IR35 Audit
Before your business can make any IR35 assessments, you need to audit your UK contractors to identify who might be impacted by the IR35 regulations. Look at all the contractors your business uses. How many are there? and where are they deployed?
Once you have a list of everyone that could be affected by IR35, your business is then in a strong position to make a clear assessment of each individual's status.
Step 2: Determinations
Determine which individuals could be affected by IR35
Now you have a list of the people who could be impacted by IR35; the next step is to define their employment status. N.B. You will need to do IR35 determinations for all your contractors working in the UK.
Please be aware that if you are using HMRC’s CEST tool to help with status determinations that it should only be used as a guideline. It is not definitive and offers you no liability protection.
Our IR35 experts at IC Resources are able help you navigate making determinations using our very own tool. All contractors deemed as outside IR35 will have their determinations underwritten, removing any risk and liability you may have for outstanding tax, penalties or fines.
Step 3: Communication
Communicate with your contractors
As your business moves through the IR35 status determination process, it's vital to keep everyone you identified in step 1 informed about the process.
Take into consideration that if you have contractors that fall inside IR35 there are other factors around TAX, holiday and legal contracts that will need to be considered.
Step 4: Process
Make your IR35 processes efficient
Define a process that works for you and understand the differences between the contracts that fall inside and outside IR35.
As soon as your business has made all the IR35 status determinations it needs, setting up contractors’ payroll should be completed as quickly as possible.
We have developed a new payroll solution which allows the determinations for all of your contractors (even those not sourced through IC Resources) who are classed outside of IR35 to be underwritten, protecting you against any liability in regard to an HMRC investigation.
Step 5: Legal
Review and revise employment contracts
One of the most important aspects of the IR35 determinations your business makes is how contract terms and conditions could change to reflect your contractors’ new status.
Finally, take legal advice on any changes you need to make to the contracts and agreements you issue to new and existing contractors.
IC Resources has a team of IR35 experts who are available to help you navigate through the IR35 regulations and determinations. We can help you to understand what this means for your business and your contractors. There will be changes that you will need to make and we are here to make the transition period as easy as possible.
We are pleased to offer our clients the use of our assessment tool, completely free of charge, for all contractors on the IC Resources payroll. The tool not only gives you a quick and accurate determination, but it will also remove the liability from the end-client as well as the fee payer, providing the contractor continues working under the practices and rules stipulated in their contract, you will be covered against any unpaid tax or penalties should HMRC carry out an investigation.