Contingent workforce buyers should start preparing for proposed expansion of the UK’s IR35 off-payroll working rules covering taxation and independent contractors to the private sector. Although the proposed legislation is not expected to be published until this summer and will not take effect until April 6, 2020, organizations should take steps now to prepare for the revised rules.
In March, the UK government opened a public consultation [1] on proposals to extend the IR35 off-payroll working rules that currently apply to public authorities to medium and large businesses in the private sector. The consultation, where the government is accepting comments, ends on May 26.
The smallest private-sector organizations will not be affected. A company qualifies as small in a year if it satisfies two or more of the following requirements: Annual turnover of not more than £10.2 million; balance sheet total of not more than £5.1 million; and not more than 50 employees.
Staffing Industry Analysts’ new report, “Implementing IR35 Off-Payroll Working Rules, a Guide for Contingent Workforce Buyers [2],” examines the proposals outlined by the UK government. It also contains a 17-item checklist detailing how contingent workforce buyers — both public bodies and affected private organizations — can prepare to be in compliance with the revised rules by April 2020. The checklist covers:
- Understand the IR35 OPW Rules and the obligations imposed on you by them
- Get “buy-in” from key stakeholders
- Create an implementation plan and a project team
- Communicate details of the plan to internal and external stakeholders
- Identify the contracts and contractors that are potentially covered by the IR35 OPW Rules
- Categorize those contractors that are potentially covered by the IR35 OPW Rules
- Establish a system for conducting assessment of existing Personal Service Company (PSC) contractors and future engagements
- Conduct assessments of existing PSC contractors
- Make determinations in respect of existing PSC contractors
- Communicating the outcome of a determination
- Establish a process for dealing with requests for reasons and disagreements
- Paying PSC contractors determined as being inside IR35
- Managing contractors determined as being inside IR35
- Managing contractors determined as being outside IR35
- Keep records of your assessment and determination
- Design a future contingent workforce engagement strategy
- Monitor and keep under review engagements of PSC contractors
In addition to the report, CWS Council members may attend an SIA webinar on May 15 [3], during which Fiona Coombe, director of legal and regulatory research, and Peter Reagan, senior director of contingent workforce strategies and research, will discuss how this reform will affect your business in the UK and any self-employed independent contractors working for you through their own personal service company.