In the South West small companies make a huge contribution to the Region’s economy. There has been much criticism of the IR35 reforms due to take effect on 6 April 2020. How will the reforms affect business and contractors?
The IR35 rules themselves have not significantly changed but the “off payroll working rules,” are set to change if certain criteria are met. Most medium to small companies use the Personal Service Companies (PSC’s) usually an individual with expert skills from time to time or regularly and these limited company contractors make a huge contribution to business in the UK.
In practice businesses will have to look at the contract and determine if the contractor is really self-employed. The purpose of this is to crack down on PAYE avoidance by PSC’s paying themselves tax free dividends. If a PSC acts for many end users this won’t be a problem if they work for just one organisation it will be a problem.
If two of these three criteria apply for two consecutive tax years or more an organisation will be subject to the new rules and responsible: your turnover exceeds £10.2 million, Balance sheets exceeds £5.1 million, or the average number of employees exceeds 50.
Remember the main change here is that the PSC or individual no longer decides their status the end user does, and should carry out an assessment if they meet two of the three above criteria.
If after reading this you would like help with your IR35 responsibilities do not hesitate to contact the Beers Employment Team on 01752 581062. Slade De Lacey, Partner Beers LLP