IR35 - How are you Planning for April 2020?
Ahead of next years proposed IR35 changes by the HMRC that will affect the private sector, Streamline is enabling partners, clients and contractors to prepare.
Introduced in 2000 by HMRC, it has traditionally been the Director of the PSC’s (Ltd Company Contractor) decision whether the role is inside or outside of IR35. Case law has established 4 key areas to be taken into account when assessing the role:
- MOO (Mutuality of Obligation)
- Financial Risk
The 2017 IR35 legislation enshrined the fundamental change within the public sector that the end hirer became responsible for determining status: not the individual. The legislation required the end hirer to take “reasonable care” when formulating these determinations. The process whereby IR35 status is assessed has not changed - just the entity that is responsible.
In April 2020 HMRC will be rolling out changes that broadly mirror those currently in place for the public sector to the private sector. The most notable difference to the previous public sector changes, is the proposed transfer of debt. The liability will not be solely sat with the fee payer; as HMRC will be able to move up the chain to include the party that contracts with the end client (hirers). This, in turn, brings additional risk to the recruitment supply chain.
What Did we learn?
In the Public Sector our research concluded that often Hirers were slow to react and unprepared for the changes. Many end hirers had insufficient time to amend their processes to include comprehensive status determinations, so inappropriate ‘blanket decisions’ were commonplace. Workers and hiring managers complained of not being supported or communicated with, effectively resulting in large project delays and there was a huge migration to the Private Sector for impacted contractors with sector transferable skills
What Will happen?
We have some guidance as to how the HMRC propose to roll out these IR35 changes however, there are still many factors to be decided. A current consultation is underway until May 2019 and is due to report in the coming months. We await final confirmation of whether the legislation shall mirror that applying in the public sector, the extent of reporting overheads to the supply chain and not least how case law shall develop the Reasonable Care and Challenge Process.
Where can Streamline help?
In order to enable you to carry out measures of “Reasonable care” ahead of the 2020 IR35 changes to the private sector, Streamline is already holding meetings and partnership discussions with specialist Legal advisors, Consultancies and insurance providers in IR35 specialist products.
We have now identified a specialist legal consultancy and law firm as our partnership company to advise clients in terms of taking appropriate measures to comply with IR35.
As advisor and Agency, Streamline would facilitate IR35 Decisions, undertake Compliance Audits and provide Contractual Support. This would be achieved by working with the End Hirer / Engager to carry out Worker Audit, Role Grading, Creation of protocols and documents, provide Legal Support, Report Filing and Monthly Management information
In addition to the Compliance Audit and reasonable care measures, Streamline has identified a unique insurance product in the market from another Streamline partner. This product, to be launched in June 2019 would effectively negate risk through the supply chain of PSC workers as the policy wording covers the party who is held responsible for the taxes, fines and penalties.
Working with Streamline, we will guide you through the implementation of appropriate measures and changes that will minimise your exposure and risk.
To get in touch please contact: Mark.Nelson@Screc.co.uk / 01727 794 202