Over half of Limited Company contractors don’t understand IR35 reforms

With IR35 reforms to the private sector set to come into play in April 2020, there are a number of Limited Company contractors who still don’t fully understand the legislation details.

Surveying more than 1,000 contractors, the Morson Group found that as many as 54% of Limited Company contractors are unaware of the exact details when it comes to the looming IR35 reforms – including how to correctly determine whether a contractor will fall in or out of the legislation.

Phil Beardwood, compliance & assurance director at the Morson Group, said, “Some businesses believe that it’s the responsibility of the labour provider to determine the status of their contractor workforce, yet it’s down to the end client to conduct these reviews and ultimately make this decision, which may provide the answer as to why some contractors aren’t yet aware of the forthcoming changes.

“Uncertainty caused by the Brexit narrative and the Chancellor’s decision to cancel the Budget has led to some organisations believing that the forthcoming IR35 legislation reform will be delayed or even cancelled. This is certainly not the case and the new tax regime governing contractors will remain top of the agenda in the private sector. The countdown to comply is on, with those companies who choose to bury their head in the sand posing major risk to their operations.”

Beardwood added, “We strongly recommend that end clients do not simply adopt a blanket approach as a quick fix to reducing their tax risk. Lessons learned from the public sector rollout means that those who do try to cut corners risk losing contractors to a competitor who may correctly deem the same individuals to be outside of IR35.

“Flexible workers are a major contributor to the UK economy and key to the country’s economic prospects, with many of our clients reliant on these ‘talent on demand’ workers, especially those operating in engineering, construction, IT, energy, aerospace, rail and defence. If we’re to preserve this vital workforce and remain competitive in a global marketplace, then it’s crucial to assess individuals fairly and on a case-by-case basis, and prevent them being wrongly placed inside, and vice versa outside.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.