What is IR35 and How does it affect your Business?

IR35 legislation is changing, as the same ‘off-payroll rules’ that have impacted the public sector since 2017 are now being rolled out across all businesses and contractors both private and public. For most organisations the April 2020 implementation date is not on their radar, but in order to prepare, affected businesses must begin auditing their entire contractor workforce as soon as possible.

If you are a small business, then IR35 will not apply. However, an HMRC investigation could be time consuming, costly and disruptive should you be audited.

When is IR35 legislation coming up?

The legislation will come into effect in April 2020.

What is IR35?

IR35 identifies individuals working via intermediaries who are in fact disguised employees

IR35 ensures that such an individual should be treated like an employee for tax and NIC purposes

It ensures that the correct tax and NIC is paid

What are the changes in IR35 that I should know about?

From April 2020, the responsibility for setting IR35 status will be passed from contractors to the medium and large private sector companies that engage these workers.

Incorrectly labelling a disguised employee as being outside IR35 can result in hefty fines for the client, increasing the risk attached to hiring contractors. As a result, some public bodies – including HMRC itself, have since stopped using limited company contractors.

The IR35 decisions are primarily based on (but not limited to):

Does the contractor provide a customised service?
Is the contractor under the direction and control of the company?
Does the company have the right to substitution of a contractor?
Does the contractor get treated as a permanent employee of the company?

What does this mean for your business?

The way you engage talent should be reviewed. The consequences of getting this wrong can be costly and disruptive to all parties connected.

I still want to hire flexible resources but do not want to deal with the compliance and IR35 risk?

Satigo Residency have more than 6 years’ experience in proactively engaging with SME’s via a service-based contract and collaborated work deliverables to provide talent as a service – no more IR35 challenges!

What is IR35 and How does it affect your Business?

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