IR35 delay – What does this mean?

“This postponement will be a welcome relief for contractors who are facing great uncertainty as a result of the current COVID-19 pandemic. Contractors should not be complacent, however, this is not a free pass to use a Personal Service Company for a role that has now been captured inside IR35. Since responsibility for IR35 compliance remains with contractors for the time being, they need to ensure that they are meeting their obligations over the next 12 months and have a robust IR35 review from a specialist firm.

“The new date will allow businesses who have yet to adequately prepare for the IR35 changes enough time to take appropriate action, with much clearer guidance from HMRC than they have had previously. Hopefully some of the businesses who have implemented knee-jerk blanket bans on contractors will also now have time to reconsider their strategy for ensuring access to flexible expertise.

“Those end hirers that have invested in getting IR35 right are well prepared for next April and can now use the next 12 months to consider how to accommodate PSCs for roles currently thought to be inside IR35. This might include changing contracts to ensure that the roles can be considered outside and remain compliant.

“We would advise all businesses who work with contractors to build IR35 compliance into their planning for the next financial year, bearing in mind that it has taken many firms six months to prepare for the initial deadline.”