In our last newsletter, I dared to dream that with an election coming and the political landscape so volatile there may have been a rethink by a responsible Government on the sense of the new IR35 legislation.
But that’s the nature of dreams… when you wake up reality sets in, as all the main political parties promised an IR35 review in their election promises, and so too did the Conservatives, although they were the last to do so in the last days before the election. On 7th January, they delivered on their promise and announced a review.
However, with seasoned political craft, the review is not on the workings of the legislation but on how to implement the legislation. This is comparable to promising to take your partner ‘out’ for their birthday and then announcing when you’ve stepped out of the front door of your house that you’ve been ‘out’ and now you can go back inside the house. Clever but not sincere.
So, we now must accept the strong likelihood that the new IR35 legislation will come into law on 6th April 2020. But all is not lost. We have seen many end clients consider the commercial risks of losing an essential contractor workforce more relevant to them than the tax risks of their new IR35 responsibilities.
It is important to communicate with your end clients and agencies to create a positive atmosphere of you being in business on your own as a freelance contractor and being far removed from the deemed employee that IR35 threatens.
You control how you do your work, you may well have the right to use a substitute (even though that right is practically very unlikely to be used), you have no continued rights for future work, you carry the risk of error, and generally have no employment benefits. Those factors should be stressed to your end clients.
January and February are the critical months when most end clients will make their decisions on IR35 status so do your best to communicate with your colleagues and end clients.
Should you be deemed to be inside IR35 and taxed as deemed employee, as we note in another article later in this newswire, consider the benefits of continuing to work through your limited company, leaving open getting other outside IR35 contracts and also the possibility of the reversal of the taxes on the inside IR35 contract and a future refund.
We have been working with many of our clients through this new IR35 process and are here for all our clients to help in any way we can. Please keep in touch with us on what is happening with your position and we will give you our guidance.