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How will IR35 impact my business?
There are many risks and opportunities that will arise in April 2021 when IR35 reforms come into force in the private sector. Companies that act in good time will minimise risks and reap the rewards.
Risks if IR35 is not handled correctly
- Financial: Face substantial fines of over 50% on top of contractors’ pay
- Operational: Risk delays to critical projects due to loss of resource
- Legal: Put your company in the firing line for litigation with HMRC or workers
- Reputational: Dent your reputation and restrict the flow of off-payroll talent into your business
Opportunities if you prepare your business
- Awareness: Use IR35 to finally understand the full composition of your workforce, including spend
- Change: Treat IR35 as a catalyst to implement a market-leading contingent workforce solution
- Attract: Create a competitive advantage by making yourself a magnet for off-payroll talent
- Retain: Secure vital existing off-payroll workers or even migrate them to your permanent workforce
How much could IR35 cost my business?
If HMRC find that assignment are incorrectly determined as ‘outside’ when they are in fact ‘inside’, clients could be liable to pay charges amounting to more than 50% of the total amount paid to each contractor.
This will likely be backdated to cover the full length of the assignment from 6 April 2021, up to a maximum of four years.
This means that, in 2024, you could be liable to pay HMRC an additional 50% of your total contingent worker costs for the past four years, plus any fines and interest on overdue payments.”
Turning the threat of IR35 into an opportunity
Before you act on IR35, you need to understand your business’ exposure. Complete our IR35 Impact Assessment to measure the extent to which your business might be affected.