IR35 – Journey to April 2021

We are pleased to welcome you to Deloitte’s IR35 dedicated pages. The goal of these pages is to inform those who are impacted by the prospective IR35 private sector changes and share our experience of working with many other organisations who are also preparing for the change. Please note: These pages have been superceded by our new ‘Off payroll workers webpage’, which contains more up to date content on ‘off payroll’ or contingent workers. We continue to keep this ‘IR35 Journey to April 2021’ page accessible, however, as we understand it contains information which many companies still find useful.

Access our new ‘Off payroll workers webpage’ here.

What can you find on these IR35 pages?

We will continually share Deloitte’s latest insight, key updates and solutions as we move towards 6 April 2021, the deferred introduction date for the new rules.

The late deferral of the reform, coupled with the disruption caused by the COVID-19 pandemic, has left organisations which engage with off-payroll workers at different stages of readiness for IR35, as we move towards the new implementation date of 6 April 2021. The content we are sharing is valuable for all organisations preparing for the changes, whether they are at an early stage of their preparation or recommencing pre-6 April 2020 IR35 work/projects, or whether they that have already implemented the plans they had developed before 6 April 2020 to operate IR35 “business as usual” processes going forward.

A newly introduced IR35 readiness framework (click IR35 readiness framework button above), which outlines the key phases of preparation for organisations at different stages of their preparation, through to operating successfully in a business as usual.

One key challenge that organisations have faced in their preparations to date is developing a robust methodology for making status assessments. Our IR35 Status Assessment page shares our perspective on this, as well as learning points from pre-6 April 2020 preparations. It also draws on our experience of HMRC’s approach to the equivalent IR35 public sector rules. It includes FAQs on topics such as status assessment tools, how to resolve ‘undetermined’ or complex cases, and how organisations should be focusing on a methodology which supports a review of an incumbent population, but also considers how to manage future “business as usual” compliance.

To complement our bespoke advice, we have developed technology solutions to support organisations in identifying off-payroll workers and managing the assessment process as part of their wider resourcing and on-boarding strategy. These are innovative, dynamic tools designed to assist all organisations engaging with off-payroll workers, but particularly those where there are high numbers of contractors, or where distinguishing individuals engaged via Personal Service Companies from other contractors may be challenging.

We have collated some further materials, including relevant HMRC publications, draft law and recordings of webinars and short videos we have prepared. This is an essential compendium of knowledge and resource for anyone tackling the IR35 rule changes.

Our IR35 key actions: explained page contains short videos exploring some key IR35 readiness actions.

We will also provide our perspective on any updates from HMRC and on the legislative process.

Recent updates

01 Dec 2020

Register here to access our webcast from 1 December 2020 on latest IR35 activity and trends.

22 July 2020

The Finance Act 2020, which contains the legislative changes impacting IR35 in the private sector effective from 6 April 2021, receives Royal Assent and becomes law

5 May 2020

Mark Groom has had an article published regarding the corporate criminal offence risks of the IR35 delay in Tax Journal which also comments on contracted-out services and statements of work. See here.

17 Mar 2020   

Government announces delay of IR35 rule change to 6 April 2021 to help businesses and individuals who are facing difficulties as a result of COVID-19. See our newsflash here.

The rule changes

In October 2018, the Chancellor confirmed that the proposed reform to the taxation of personal service companies (PSCs) in the private sector was to be implemented from 6 April 2020 for large and medium sized businesses. In March 2020, it was announced that the IR35 private sector changes will be delayed until 6 April 2021 to help businesses and individuals who are facing difficulties as a result of COVID-19.

Under the changes from April 2021, responsibility for undertaking employment status assessments will become the responsibility of the entity using the services of the worker, whilst the responsibility for operating PAYE withholding will be that of the entity paying the PSC.

The legislation also introduces the concept of a “Status Determination Statement” or “SDS”, which end users will be required to provide directly to the worker. The SDS must include not only the decision of the worker’s “deemed” employment status, but also the rationale for reaching this conclusion.

How can Deloitte help?

We can help you prepare for all aspects of the IR35 changes, including:

  • Working with your project team of key stakeholders to ensure you lay the best possible foundations, i.e. that you identify the key process steps and decisions which will need to be taken to effectively manage the change. This could begin by holding a facilitated workshop.
  • Using automation techniques prepared to identify PSCs with whom the business engages.
  • Managing the employment status assessment process and using our workflow solution to streamline communications and maintain an audit trail of discussions.
  • Drafting communications to collective/specific stakeholders, including impacted PSCs.
  • Considering contractual amendments with both PSCs and agencies you use to support with the transition to the new rules.
  • Designing new processes and controls to manage the operational impact of the changes, e.g. payroll.
  • Support with the Status Disagreement Process.
  • Supporting end-to-end project management on all of the above.

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