What contractors should do with the IR35 reprieve
To say it's been an eventful few weeks would be an understatement and we know that our customers have a lot of things on their mind right now and that IR35 is probably the least of them. We understand that many contractors are happy that it's been delayed until next April although frustrated at the distress it's caused to date. Beyond that you're more concerned with keeping yourself and your family healthy through the COVID-19 pandemic, and ensuring your business weathers this storm.
That being said, your IR35 status is something to keep eye on and make sure that, as a contractor, you take care of your responsibilities now and prepare for the changes now due in April 2021.
Preparation, preparation, preparation
Since the IR35 reforms were set to launch in the next few days, contractors should have been prepared as possible at this point. However, if you weren't prepared for the reforms, you should certainly jump on the opportunity to have a whole extra year to ensure you're ready.
The decision to delay was the right one to make at a time of social and economic upheaval but we doubt this will happen a second time. So we strongly advise all contractors to use this time wisely: get to grips with your tax status, check your contracts, discuss your status determination with end clients, and make sure your working practices are compliant. Don't wait until March 2021 in the hope of another reprieve.
Don't forget about tax liability
It's vital that you remember that the delay to the reform means that for the 2020/21 tax year, tax liability in the private sector is firmly back on your shoulders as a contractor. This means that you continue to be the one determining whether you are inside or outside IR35 and the amount of tax you should be paying.
This means that you need to continue to assess your tax status and working practices to ensure you're compliant with HMRC rules, and ensure you have evidence to back up your decisions should HMRC launch any enquiries.
How can Kingsbridge help?
At Kingsbridge, we're pleased to be in a unique position to help you, your end clients, and your recruiters by minimising the risk and cost across the whole contractor supply chain with our IR35 Protect Insurance.
IR35 Protect covers any tax investigation costs, fines and penalties, provided your contract has successfully passed an IR35 status review (this is also included in our premium cover options). However, the product has also been designed to flex with legislative changes to cover whoever HMRC holds liable in an investigation, whether that's you, your end client, or your fee-payer.
So, right, now, while the tax liability remains squarely with you as a contractor, IR35 Protect would cover and protect you, but post-April 2021, it would flex to cover whoever is liable at that point. With everything so uncertain at the moment, IR35 Protect will give you certainty and peace of mind.
If you have any questions you can still contact us, although please understand that we may take slightly longer than normal to answer your query at this time. In the meantime, we hope you stay safe and well.