IR35 in the private sector - the road ahead

We’ve been talking about the “proposed” changes to the off-payroll worker rules in the private sector for a long time, exacerbated by the Government’s announcement on 17 March to delay the legislation because of the coronavirus pandemic. However, these changes are no longer just “proposed”, as the Finance Act has now obtained royal assent confirming that the previously published IR35 legislation for the private sector will become law on 6 April 2021.

We consider the finality of this decision by the Government to be helpful as it will allow all affected by the legislation to properly consider and plan for the change in tax rules rather than being hamstrung in making important decisions or changes because of uncertainty over when/if these changes will be implemented. We also welcome the fact that the passing of the legislation through Parliament has not been unduly delayed and provides businesses with a reasonable eight months or so to get ready for 6 April. If the run up to 5 April 2020 before the Government delayed the legislation taught us anything, however, it was that many end clients, fee-payers and contractors under estimated the complexities involved in accommodating these new rules, and (certainly from the end client perspective) the resources and time needed to put new processes and policies in place to satisfy their new compliance responsibilities. It is important that the same mistakes are not made this time around as 6 April will be here before we know it and there is no turning back this time.

We are often asked by clients what other businesses are doing to implement the new IR35 rules. Answering such a question can be difficult, not least because one company’s contractor population, commercial contracts and internal processes can be completely different to another, and following the pack is not an approach we would normally recommend, especially in the context of IR35 where there is no one-size-fits-all approach to cover all the various complexities within the rules. For any business starting to look at IR35 and what needs to be done before 6 April, we would always encourage the business to consider some key aspects before pressing ahead with anything, for example:

  • Understanding their various supply chains and where they sit within each chain – this is hugely important in establishing the IR35 impact and responsibilities on the business.
  • Understanding their contractor population and the contractual arrangements. Is it clear who they are contracting with and the services being provided?
  • What is the company’s attitude to risk and have they considered their strategy on IR35? This is particularly important for end clients and can have a major influence on how the business reacts to the IR35 changes.
  • What internal resources are available, e.g. to support with introducing new policies and procedures, including the formal IR35 assessments, statements and appeals from 6 April?
  • Who are the main stakeholders, internally and externally, who need to be consulted?
  • What operational impact might these changes have on the business? This is particularly important for fee-payers such as recruitment agencies who may need to consider different business models going forward.
  • For fee-payers or contractors, what work has the end client in the supply chain carried out already? What is their intended approach to the legislative changes?

Consideration of these points at the outset should make it easier to adopt the most appropriate approach for 6 April 2021 and beyond and make the best use of valuable time and resources.

Get in touch

Johnston Carmichael has an experienced IR35 team who are supporting many businesses across the whole spectrum of the supply chain in tackling the challenges posed by the new legislation. Please do not hesitate to get in touch,, if you would like to discuss your business’s IR35 position with our team.