IR35 Postponed!

Kris Simpson explains IR35

A sole trader feeding his dog scraps while working at his dining table

I had planned to tell you how an Umbrella Company can remove the risk brought on by the IR35 Reform. However, this all got halted!

But before I continue, let me set the scene for everyone reading in the future. It’s March 2020 and we have a COVID-19 outbreak, the UK and the world are in some sort of lockdown stage to help reduce the spread of the virus and the global markets have crashed (sounds like a movie script!).

The UK government has moved into an emergency state and therefore introducing new taxation rules was not on the priority list. Add to this the fact that changes to tax during what can only be described as an economic downturn is not a good idea.

Storslagna idéer är inget som skrämmer entreprenören. Ju galnare desto bättre!

Now the scene is set, let me continue, if you have read my previous articles thank you, and welcome back, if not this may or may not make much sense to you. In short, the government decided to postpone the IR35 Private Sector Reform until April 2021, the keyword is “POSTPONED”. They made it clear that it’s coming and not to get over-excited.

So, after that key piece of news contractors rejoiced as their PSC would be usable for another year at least, and clients who hadn’t prepared were happy to have been given an extension. Only this time they now have a clear view of what needs to change.

This postponement is a blessing to some businesses and a frustration to those who had spent time and money preparing for April 2020. While the delay is helpful, the wise thing to do would be to take this opportunity to implement the right process and changes in your business to minimize the impact next year. As the market saw an increase in blanket decisions from clients. This extra year now allows those clients to find a better way.

Clients must consider:

  • – Creating a mechanism to assess the contractors you wish to engage
  • – Ensuring those who will be captured by IR35 next year are not PSC (Personal Service Company) workers for the rest of this year, migration or replacement is the best option
  • – Educating all employees on how to work with contractors
  • – Reviewing current contracts and ensure that clause mirroring is present across the whole supply chain
  • – And if 3rd party providers (Umbrella Companies) need to be audited

And that is what happened during the COVID-19 crisis of 2020. However, next week I will release my final article of this series explaining how an Umbrella Company can be your saviour during the IR35 Reform.