As the clock ticks towards April 2020 and the start date of the new Off-Payroll Tax legislation, it is a good time to share my current thoughts with you.
I cannot stress enough that IR35, which has been with us for 20 years, is not changing. What is changing is the tax liability for IR35 will transfer from the individual Personal Service Company (PSC) to the end client/agency. This has huge implications on potential tax liability for these organisations who up to now were happy for each contractor in their own PSC to make the IR35 status assessments. So, it is understandable that some will approach this very conservatively.
However, as end clients consider their approach, this last month has seen a number of our contractor clients contacting us with positive updates from their end clients and agencies on how they are dealing with the proposed legislation. Many are advising that they will be using specialist tax consultancies to help them make the complicated IR35 status assessment.
This is better than if they were to opt to use the HM Revenue & Customs (HMRC) online tool Check Employment Status for Tax (CEST) which, in the opinion of most industry experts, does not lend itself to a fair IR35 assessment.
So, each contractor should be acting NOW to have an influence on the way their end client/agency are planning to deal with the new legislation in April 2020.
- Consider your options and what you will do if, despite everything, your end client deems you to be IN IR35 from April 2020. The net cost to you would be in the region of 25% of current net pay.
- Discuss this with contractor colleagues at the same end user with the objective of lobbying your end client/agency to show why you believe you are OUTSIDE IR35 and that you expect a fair assessment to be done, and to know NOW how they expect this assessment to be done.
- Speak to us here at Cogent to provide guidance on what you have received from your end client/agency and how to approach the discussions with them.
Do not leave this until March 2020… it may well be too late once decisions have been made without your knowledge. NOW is the time to act on this and we at Cogent are here to provide guidance.
***HELP STOP THE PROPOSED NEW IR35 LEGISLATION***
click https://petition.parliament.uk/petitions/262354 to sign the petition NOW!!