IR35 Soft Landing Ending – Industry Trends: Part 4

In our recent survey, completed by more than 500 businesses, over 30% of businesses also said they had outsourced some or part of the IR35 review to their contractors.

This is one of the most worrying statistics as you are giving the party that is most invested in financial gain from IR35 the power of doing the assessment. Contractors are roughly 30% worse off financially ‘Inside’ of IR35, so you can see which result they would prefer!

Below we examine the main issues with this approach:

  • The key change in the legislation in April 2021 was removing the contractor from the review process, since the inception of IR35 in 2000 it has been the contractor’s responsibility, but this is no longer the case
  • The legislation clearly states it is the ‘Clients’ responsibility to assess the IR35 status of their workers, in no way does it mention outsourcing this to the contractor
  • To prove you have taken Reasonable Care you will need documented evidence of your process and reviews, outsourcing this removes this ability and knowledge of the process
  • The person completing the assessment must have adequate knowledge of IR35, if you have outsourced this how do you know what knowledge they have?
  • If you as a business do not take ‘Reasonable Care’ then all liabilities including, unpaid Tax, NIC, fines, penalties and interest will rest with you – how does the person complementing the assessment give you protection from this?

HMRC have provided this advice and guidance on what constitutes Reasonable Care, via an Employment Status Manual.

The points above are all covered within this HMRC document and if you have adopted any of these an urgent review is required into your processes!

For any business that is concerned with what they have read so far get in touch, as we would be happy to offer our expertise along with a selection of free IR35 reviews to test your process