When the IR35 private sector reform was delayed at the start of the pandemic, the extra 12 months to prepare seemed like a valuable lifeline. We could all put it to the back of our minds whilst we dealt with the repercussions of what we thought would be a single, short-term lockdown.
Yet here we are, already a month into 2021, and many businesses I speak to are still burying their heads in the sand. When it comes to IR35, they don’t know their exposure or their risk, and they haven’t implemented compliance methods. Why? Because, after all, we still have bigger things to worry about – right?
Wrong. Whilst IR35 may seem like a lot of hassle on top of everything else at the moment, doing nothing puts your business at substantial risk. Let me explain why you can’t afford to miss the boat on preparing for IR35…
The cost of doing nothing
Some of those businesses I mentioned think that there’s a chance the reform will be delayed again. Whilst you can never say never, I think it’s unlikely this time around; the government has spent significantly over the last 12 months, and unfortunately no one has yet discovered that mythical money tree. There’s going to be a massive tax gap to address, and it’s a fair assumption to say they will look into every viable avenue to raise income.
We expect the government to pick up on any contracts that are deemed inside of IR35. Although HMRC have confirmed that they’ll take a ‘light touch’ approach in the first year of the reform, this doesn’t apply to deliberate non-compliance. And regardless, the additional tax bill on any contractors who are found inside could be crippling for businesses.
That’s why now is the time to calculate your exposure and risk to avoid getting caught out later. Doing nothing doesn’t cost nothing – in fact, it could cost your business dearly, and you certainly can’t depend on a possible delay announcement.
The fear of missing out
Time is truly ticking. The reality is that those who opt to leave their IR35 preparations until late February or March will be at the back of the queue for support in the rush around 6th April. I’d say that this is far from ideal, wouldn’t you?
What’s more, a lot of contractors won’t be willing to stick around and wait for you to get organised when there are plenty of businesses who are very much already on the ball. So, what will this leave you with?
You’ll lose out on the best talent, as well as suffer reputational damage for leaving it until the last minute. As a result, future contractors won’t want to work with you going forward either. Opting for a ‘quick fix’ blanket-inside solution isn’t your answer either – not only is this unlawful, but most contractors will be unwilling to work under these circumstances too.
Contractor ‘FOMO’ is very real indeed.
The rise of the gig economy
Think contractor FOMO won’t be a problem because the reform will reduce contracting demand? I beg to differ with you here. After all, the public sector reform was rolled out four years ago and contractors haven’t done a disappearing act – and that’s before we mention that the pandemic has actually accelerated the consistent growth of the gig economy.
Last year, Cast UK carried out research to produce a whitepaper analysing the pandemic and how to plan for 2021. Bringing in interims with specialist skill sets to see through the crisis (and beyond) was a consistent trend. Likewise, people prefer the flexibility of remote working, as well as being able to go into a company, do a certain job, and then move on to another exciting project.
It’s clear that if you avoid contracting or attempt to bury your head in the sand, you risk sleepwalking into IR35 and missing out on the best talent as a result – not just on 6th April, but later down the line too. Interim talent is the future.
So, what are you going to do now? Prepare. And the sooner really is the better.
IR35 is a complex thing, but there is plenty of support available. Cast UK will ensure you can still bring high-calibre talent on board and remain compliant, by shouldering the responsibility and risk of hiring contractors on your behalf.
Our solution, CASTIR35, includes a free audit and analysis. We can then handle the records and reports relating to Status Determination Statements, and you provide insurance for contractors working on-site through us. On top of all this, we give you full visibility of your entire contractor supply chain to ensure the compliance of all stakeholders.
Rather than chancing large fines and even the possibility of backdated tax liabilities, we’ll take the IR35 process off your hands. If you’d like to know more, contact us, call our team on 0333 121 3345 or email email@example.com.