Spring Budget 2021 brought with it a number of reforms and a whole lot of changes to the already implemented rules. One among such is the IR35/ The off-payroll working rules. This rule particularly concerns businesses who have contract employees or are changing their staffing models. IR35 is implemented to find contactors who may be trying to pay less tax by working as ‘disguised’ employees or as self-employed workers disguising their true employment status. All businesses need to confirm to PAYE compliance effectively. Any lapses may put businesses on HMRC’s ‘risk’ list for future years.
IR35 private sector rules apply to medium and large businesses with exempt of small businesses as defined on the Companies Act 2006. It affects businesses that engage workers from:
- Personal Service Companies (PSCs)
- Partnership or via third parties
- LLP
So, all organizations have to accurately assess each employee who fall under IR35, whose tax and national insurance is deductible. It works two way with engaging organizations deeming fit a person or business for PAYE and NIC deductions and in turn the fee payer accounting for employer organization’s NIC and the apprenticeship levy if applicable. For implementation of IR-35 business who are engaged with contractors, will need do a portfolio analysis which will put out
- The commercial contracts running
- Number of PSCs engaged
- Parts of business that use PSCs
The implementation of IR35 has set an unrest within the contractor community. Even large companies are at loss as they are finding it hard to find the right talent at the right price.
Stats
- More than 51% of hiring managers reported as having lost skilled contractors, and more than 70% reported to have struggled to retain their off-payroll workers.
https://www.accountancydaily.co/finance-sector-risk-ir35-contractor-walkout
- Contractors exit from key projects left 80% of projects failing to meet deadlines or having to reset expectations.
Implications
A detailed audit of the contract workforce has to be done mapping them with dependent assignment. Skills required, number of hires required and time of the requirement also has to be assessed.
Replacing critical skilled hands who may be on contract is pushing the companies to their wits end as there is already a shortage of skilled talent. This also presents a major administration costs and lot of work for businesses who may either chose to abandon all the contractors or not follow the compliance altogether.
With so many things on plate to pay attention to it is easy to lose sight of important things.
Fret not! CNB Consulting can handle diligently handle this with our experience and knowledge of PAYE and NIC compliance. We will work with you and the key stakeholders to identify the contracts at risk, assess the financial and operational impact on your business and implement appropriate changes to engage non-payroll employees and make your business all set for the new rule.
Our team of expert accountants can take up the burden of your IR 35 requirements along with payrolling services. As a dependable outsourcing partner, you can reach out to us at 020-45382319 and we’ll draw clear strategy in place to manage these important changes. Contact us today for a robust compliance structure to manage finances and obligations.