IR35 FOUR MONTHS ON: THE LESSONS

IR35: The contractor lessons

Four months on from the reform of IR35 rules for the private sector, there are important IR35 contractor lessons, according to a new article.

Writing for ContractorUK, Kate Cottrell of Bauer & Cottrell Limited, reflects on the impact of the reforms, and what we have learned.

IR35 Contractor Lessons

In the article, Cottrell highlights four important IR35 contractor lessons from the first four months of IR35 reform.

She begins by saying those who are engaged outside IR35 in the public sector need to consider what will happen when HMRC investigates and gauge the implications for themselves.

In the ContractorUK article she writes: ‘Just because the contractor would not be liable (that said, look out for any indemnities in your contract and get them removed), that is no reason to simply sit back, not least because if the status changes from ‘outside’ to ‘inside’ this can cause a lot of accounting issues.’

Check and Re-check

Cottrell adds: ‘HMRC has stated that where a contractor was previously outside IR35 and now found inside (from April 6th 2021), they will not investigate the past period. However, there is absolutely nothing to stop them doing exactly the opposite – ie investigating. So it is worth checking or re-checking any previously declared outside IR35 position.’

Due Diligence

The article continues: ‘Don’t take your eye off the IR35/off-payroll ball! Always do your own “due diligence”. If you are working for a small company and currently unaffected by the 2021 framework, get all the necessary details in writing.’

The list of lessons concludes with: ‘Try to understand all the rules yourself and do not be afraid to challenge a Status Determination.’

Home Straight

Cottrell also examines the broad lessons learned from four months of IR35 reform, and queries whether are now on the ‘home straight’.

The article says: ‘Even if you think you are, don’t get complacent. Keep taking notice, continue to check out your own position, play about with a status tool AND above all else, take advice from the right people.’

Win for Treasury

In her piece for ContractorUK, Cottrell looks back in detail at the past four months, including the tax bills for the Department of Work and Pensions and the Home Office, the controversy over HMRC’s CEST tool, and HMRC’s public sector research ahead of the reform.

Read On

To read the full article, visit ContractorUK.

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