Are you prepared for the off-payroll rules changes?

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As of April 6, intermediary legislation IR35 will be introduced affecting businesses that work through an intermediary. George Webb, UK Director for the business software company, Dreamix explains what the changes mean and how you can prepare for those changes.

The current rules: In order to make a well-thought-out decision, you need to be familiar with the comparison between the current regulations, and the fast-approaching changes.

The legislation is affecting both the individual workers and their clients – the businesses that hire the workers. Where the client is in the public sector, it’s the client’s responsibility to decide the employment status. The worker needs to be informed of that decision and organise themselves accordingly.

Where workers operate in the private sector, it’s up to the intermediary of the workers’ or the worker themselves, to decide the employment status for each contract. The private sector also includes other organisations such as certain charities.

After April 6: Public sector organisations, along with medium or large scale private sector clients will be held accountable to assess if the new set of rules apply. Where a worker is providing a service to a client then the client will be the one responsible for assessing the worker’s employment status.

The IR35 rules serve to determine that workers who provide direct service to an organisation in the same practice as an employee, pay the same tax, as do the employees.

When do the IR35 rules apply? The rules apply when a worker provides a service directly or through an intermediary. Often, the intermediary is a personal service company owned by the worker, or a partnership with another company or an individual.

Who is affected?

  • a worker who provides their services through their intermediary
  • a client who receives services from a worker through their intermediary
  • an agency providing workers’ services through their intermediary

The new rules apply to private sector companies that meet two or more of these conditions:

  • you have an annual turnover of more than £10.2 million
  • you have a balance sheet total of more than £5.1 million
  • you have more than 50 employees

This is in line with the small companies’ regime.

As this legislation affects different types of businesses, it needs to be thoroughly assessed from different positions. You can find more information on the links below, that will help you adapt smoothly to the changes.

The IR35 rules apply if a worker provides their services to a client through an intermediary of any kind, but would be registered as an employee if they were contacted directly. If you want to check if those rules apply to your organisation, you can use the following service to help determine that.

As a client, you need to decide the employment status for every contract you have, with an agency or a worker. However, small clients that operate in the private sector will not be obligated to decide the employment status of their workers. Under those specific conditions, this will remain the responsibility of the worker’s intermediary.

As an intermediary, where your worker provides work that supports a public sector client, or a medium or large private sector client, you may need to meet these requirements: You should obtain an employment status determination from the client, along with the reasoning behind that decision and you will be able to dispute the determination given to them if they disagree with it

Different rules apply if your worker: does not get an employment status determination from the client or provides services to small clients in the private sector.

There are a number of questions you may wish to ask

Were you aware of the legislation changes before now? How are you planning to meet the requirements, while growing your business? Will you choose to continue working with local intermediary services or consider hiring off-shore employees? Or other forms of outreached services?

This is a sponsored post from Dreamix, a bespoke software development company, working closely with UK businesses that are looking to develop their products through outsourcing services. They would like to share their experience and help you build a strategy that will ensure your organisation avoids the negative implications of the new rules starting this April 2020.

George Webb is a UK Director of Dreamix, an experienced business leader with a background in IT, Financial Services, Asset Management, Logistics and Defence. 

If you want to take advantage of a free consultation, you can fill in the form about IR35 or contact them directly.