IR35 Virtual Seminar – Heather Smallwood, Tax Director, Grant Thornton

Rutherford Cross ran an IR35 Virtual Seminar with Heather Smallwood, Tax Director of Grant Thornton earlier this week. Thanks to the 18 Contractors that attended the seminar  – we hope everyone found it useful.  Heather gave a short overview of the key headlines in relation to IR35 at this time and we took away the following:

  • With the IR35 Reforms for the Private sector being postponed until 2021 the mismatch between the Public and Private sectors remains
  • Many companies have invested a lot of time and money in preparation for roll out this year with plans and processes having to be delayed or changed completely
  • The HMRC Legislation is still in draft format with serious questions being raised about its effectiveness and fairness as recently as this week with the publication of a report from the House of Lords Economic Affairs Finance Bill Sub-Committee
  • HMRC’s Check Employment Status for Tax (CEST) tool doesn’t provide an answer in 100% of cases – in approximately 15% of assessments no decision is reached and even where it is, there is no indication of how strong that decision is
  • Grant Thornton and other firms have developed their own status assessment tools as part of wider contractor management solutions and provide an in or outside decision in every case along with how borderline that decision may be
  • There seems to be a misconception that if no substitute can be provided this automatically leads to an inside IR35 decision. Substitution does carry a lot of weight but there isn’t one single factor within an employed versus self-employed test that on its own leads to a decision. It’s a build-up of all of the factors that need to be considered including Supervision and Control, Financial Risk, Mutuality of Obligation and Part and Parcel of the organisation
  • It is advised that businesses use the delay as an opportunity to help plan for the implementation and revisit their processes and contractor assessments well in advance of next April, although it was acknowledged that currently the challenges being introduced by COVID are having to take priority

Further clarity on IR35 and its roll out into the Private Sector is likely to be reinforced later this year in October and we at Rutherford Cross will endeavour to keep you informed of developments as they happen.  Contact [email protected] for more information.