Top ten tips for the IR35 deadline: what businesses who use consultants need to check

The changes to IR35 are due to come into force on 6 April 2021. In spite of the ongoing pandemic the hopes of a further postponement by the government have not materialised, with the Chancellor taking the opportunity to raise an extra £1 billion in tax to cover the costs of Coronavirus.

With only a few months to go before the deadline approaches, here are some top tips that businesses in the private sector who use consultants should follow to ensure that they are complying with the changes.

  1. Check if you are caught: The new rules should not apply to you if your turnover is below £10.2m and your balance sheet total is less than £5.1m.
  2. Find out who works for you off-payroll: Is it personal or composite services supplied?
  3. Ask the right questions: Undertake an employed v self employed assessment of each personal services arrangement, using established case law.
  4. Know the right responses: Having evaluated using case law run the answers through the HMRC Check Employment Status Tool (CEST).
  5. Review the results: Who does CEST say are employed (within IR35), self-employed or undetermined.
  6. Get in to the detail: Look at those that are within IR35 or undetermined to see if there is anything that needs clarifying or changing.
  7. Do the maths: calculate the potential impact of moving those within IR35 on to the ‘payroll’ for tax/NIC and apprenticeship levy.
  8. Move in the right direction: For those that fall within IR35, start moving contracts and payment dates to some ‘standard’ dates and arrangements to make the admin easier
  9. Get set up: Establish how you will run the ‘payroll’ for those within IR35 so you are ready to fulfil your new compliance responsibilities.
  10. It’s good to talk: Don’t leave it until later. Ensure you clearly and regularly communicate throughout the ‘process’ with all internal and external stakeholders to ensure you minimise ‘nasty surprises’.

Find out more

You can find out more about the upcoming IR35 changes in our fact sheet.

Read our IR35 fact sheet

If you have any queries relating to the new IR35 legislation, please get in touch on 01903 234094.

A version of this blog originally appeared on the website of MHA member firm, MHA Macintyre Hudson.