Three prominent BBC presenters have been landed with a tax bill of £920,000 after HMRC ruled last month that they are not legitimately self-employed. Their assignments were deemed to be caught within IR35 and therefore they therefore had to pay a higher rate of tax, while unpaid national insurance contributions also had to be settled.
IR35 will be rolled out in the private sector in six months’ time, on 6 April 2020, leaving recruiters and their clients just six months to get their house in order. Feedback from our members has been mixed, some feel they are ready, others haven’t yet begun looking at it. And who can blame them? It’s difficult enough to see beyond the 31st of October let alone April next year.
The BBC cases show us how high the stakes can be, and how head-scratching complicated it can be to work out wherever an assignment falls inside or outside of IR35. Falling foul of the law next April will have big financial consequences, for agencies. Agencies supplying contractors could be financially liable for loss of tax if, after an enquiry, HMRC considers the engagement as falling inside of IR35. Meanwhile, agencies who can demonstrate knowledge in the area will undoubtedly be seen as more attractive for contractors and hirers.
IR35 won’t wait for us
That’s despite our strong warning to ministers that now is completely the wrong time for more changes in business, and we need to protect our flexible labour market. Skipping over the Brexit uncertainty for a moment, next year will also welcome several new employment laws courtesy of the Good Work Plan – itemised payslips and written statements for all, the key information document, the abolition of Swedish derogation, and holiday pay reference period changes from 12 to 15 weeks – will all land on the same date. That’s a lot to deal with – which is why getting to grips with IR35 early will make all the difference.
So what do you need to do?
The REC has been working hard to help members prepare. This has included a series of seminars across the country and there are more to follow. The IR35 hub contains helpful resources you can use to understand the changes, what needs to be done, and how to go about getting ready. As always our team is on hand to help should you need us.
With only six months to go, and what looks like an extremely bumpy journey to get there, getting ready for IR35 needs to be a top priority.