IR35 changes were introduced in April 2021, with medium to large businesses being forced to assess the tax status of off-payroll workers they hire. Many experts in the field warned these changes would raise costs and hinder the usage of contractors and self-employed workers and on this, research has been conducted on how the industry is coping.
"Half of contractors might challenge their IR35 assessment, while a similar number aren’t sure if their client has provided them with a Status Determination Statement despite it being a legal requirement.
"Firms need to remember, preparing for IR35 reform was phase one.
"Phase two - which we have now entered - is ensuring compliance going forward."
Seb went on to provide guidance on how compliance can be adhered to, for both firms and the contractors they hire.
Firms
Many feared businesses would categorize all the contractors they hire as "inside" IR35 but Seb urged caution on this.
He said: "Businesses mustn’t blanket place all contractors inside IR35 and need to carry out assessments with ‘reasonable care’.
"Best practice is to decide IR35 status on a case-by-case basis, given the complexity of the legislation and how even minor changes in a contractor’s contract or working practices can alter true IR35 status.
"Something else often overlooked is the need to review a contract should the way in which the service is delivered change.
"Failure to do so could result in non-compliance, which is why contracts need to be regularly assessed.”
Contractors
Seb concluded by providing guidance to the workers directly impacted by the changes: "Unless a contractor is engaged by a small company they are not responsible for determining IR35 status anymore.
"But that’s not to say contractors are powerless.
"From having their contract assessed separately by a third party to ensuring they operate as a genuine business at all times – and not as a disguised employee – there certainly are ways for contractors to help their clients make the right decision.”
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