Accountants – how to support your contractors in 2022
2021 has been a tough year for contractors: just think about the ongoing coronavirus lockdowns, the impact of Brexit creating uncertainty in the economy, and the introduction of complex new IR35 legislation. As an accountant, your role is to support your contractors and their finances through the best and worst of times – and we appreciate the great job you do! We think that the best Christmas gift accountants can give to their contractor clients is ongoing support. With that in mind, we take a look ahead to 2022, and think about what accountancies can do to support their contractors over the next 12 months.
Coronavirus is still a threat
With rising cases, a new variant in the mix and the return of mask-mandates and travel restrictions, it’s clear that COVID-19 isn’t quite done wreaking havoc quite yet. The possibility of another surge is raising alarm bells with scientists and, despite the government’s insistence that we all continue with our Christmas parties as planned, there are warning signs that other interventions might be necessary, with the “work from home if you can” policy returning. Any further reintroduction of restrictions is bound to have a knock-on effect on the economy and, ultimately, contractor finances. This also comes at a time when government financial relief schemes like furlough, SEISS and government-back business loan schemes have all wrapped up.
Contractors will be worrying about their finances, particularly if they work in industries that are vulnerable to tightened restrictions like hospitality, leisure or the arts. You can help by working with them to plan a contingency for lockdowns and helping them keep a saving pot for getting through the fallow months. If there are new coronavirus restrictions announced, accountants will need to quickly get their contractors up-to-date with any new financial relief schemes that are introduced to make sure that they know what they can claim if their business is adversely affected. Hopefully, the success of the vaccination programme in the UK and an additional push for booster jabs will mean that business can carry on more or less as usual – but it’s always good to have a plan in case not, and your contractors will appreciate your foresight and support.
Self-assessment tax returns
Organised contractors and their accountants can probably sit back and feel smug about this one – but as you will all be aware the Self-Assessment Tax Return deadline is the 31st January. By this date, your contractors should both have completed the Self-Assessment form and paid any money due to HMRC. A reminder about the upcoming deadline might be useful for any of your clients who you know have not yet submitted their return, along with a list of the ways that you can help them.
Making Tax Digital
Clients with larger limited companies may already have migrated over to the Making Tax Digital system – but April 2022 will see all VAT registered businesses required to submit their VAT returns and keep records via compatible computer software. This applies even if they are under the VAT turnover threshold of £85,000 taxable profits. If you know some of your clients are still using the older system, the new year is a good time to give them a nudge and offer them some help with moving to compatible digital record keeping and reporting software.
IR35 support for contractors and accountants
January often sees a reshuffling of work and contracts, so it can be a very busy time for contractors getting placed into new assignments. April 2021 brought big changes to off-payroll working legislation, meaning that there are new procedures for assessing the IR35 status of a contract. This may mean that your clients encounter a mix of inside and outside IR35 contracts, which could make their personal income tax status more complex. It may also mean that they need your support in ensuring that the status of contracts is determined correctly, so that they don’t experience the stress of an investigation or having to repay tax or fines. Keep your contractors compliant with professional, independent status assessments using Kingsbridge’s IR35 Status Tool.
The Kingsbridge IR35 Status Tool is a specialist IR35 status assessment service that can support accountants to fairly assess the likely status and compliance of a contract, using a series of simple but well-crafted questions to give a result you can trust. We use a unique hybrid approach to IR35 status determination, where if your answers deliver a borderline result we will follow up with a conversation with one of our IR35 legal experts to deliver a determination backed by our years of experience.
Accountants can use it to sense-check any determinations that your contractor clients are given, to ensure that you’re fulfilling your obligations and duty to give the best advice to your clients, and also help your clients remain compliant if they wish to continue working outside IR35. If you’re an accountant looking to support your contractors, get in touch with our partnerships team today, who can give you a free, no-obligation demo of our status tool and discuss other ways we can help you and your team support contractors in 2022.