Pure has worked with Birketts LLP and accountancy firm PEM to deliver a series of business breakfasts designed to help demystify the potentially imminent IR35 changes to ‘off-payroll’ workers in the private sector.
With many complexities and uncertainties still surrounding the proposed reforms to Intermediaries Legislation, known as IR35, more than 170 HR professionals, business owners and self-employed workers attended the region-wide events looking for expert guidance on the changes, which are due to come in to effect for private sector businesses on 6 April.
Ian Walters, CEO at Pure and host of the breakfast briefings, said:
“These proposed regulations are still only in draft form, having been postponed due to Brexit, and now they are also in the process of further consultation. However, despite these uncertainties, there is a real possibility that medium and large businesses will need to be ready and legally compliant in less than two months’ time. We know many businesses like the flexibility of working with individuals who can provide services through their own limited companies or via agencies. We also support many organisations in the region with recruiting temporary professionals at all levels, providing interim cover and short-term injections of talent and expertise. As a business we need to understand and prepare for these changes. We want to support other businesses to do the same.”
The changes are being made by HM Revenue & Customs (HMRC) to prevent tax avoidance from what it sees as ‘disguised employment’. This is when individuals work ‘off-payroll’ for an organisation and supply their services through their own limited companies as an intermediary, and where they don’t meet HMRC’s definition of self-employment. In essence, workers who would normally be considered an employee if they were providing their services direct to an organisation will be required to pay broadly the same tax and National Insurance contributions (NICs). To achieve this, the ultimate responsibility for determining an individual’s IR35 status, and their subsequent tax payments, will move from the worker’s company to those paying the worker and the end client organisations, however, small businesses are expected to be exempt under the new rules.
In collaboration with Birketts and PEM, Pure delivered briefing sessions in Cambridge, Chelmsford, Ipswich and Norwich to help businesses understand whether the new regulations will affect them and how to prepare and manage the changes.
The sessions covered how businesses can determine whether individual workers fall inside or outside of IR35, the potential pitfalls of the different tax status assessment tools and case study examples of issues raised since the changes were first introduced within the public sector in 2017. As well as looking at the impact on the end client businesses, and where the ultimate liability will rest within different employment chains. The events also explored what the changes will mean for contractors, temporary workers, intermediaries and employers. It was clear that delegates had concerns about the proposed regulations, with polls run across all sessions showing that 59% of delegates believed the off-payroll working rules should be delayed and 51% expecting to incur extra costs as a result of the changes.
Annette Wyld, Head of Finance at Pure, added:
“We have produced guides for our clients and workers to help them understand the changes and to communicate the IR35 reforms. Although these are still only draft regulations at the moment, we are fully prepared and have put our own strategies in place to help support both our clients and our workers. Having gone through this process, our key advice for other businesses is to avoid making ‘blanket decisions’. Review each assignment based on the reality of the relationship and ensure contractual terms are in place which reflect this, whether engaged directly or via agencies and to communicate plans and timings with everyone involved.”
Visit Pure’s dedicated IR35 information page for more information about its approach and the guides it has produced for clients and workers. For more information about temporary professional recruitment solutions contact your local Pure office.
Annette joined Pure in 2006 to establish the Finance department and now leads the team with responsibility for all aspects of financial control and reporting at Pure. Annette is a CIMA qualified accountant and has over 20 years’ finance experience with extensive knowledge in the recruitment and employment industry.