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Markel Tax

30 Aug 2018

The IR35 consultation has closed, the answers are submitted, so what next?

We submitted our consultation response on 10 August 2018 and have provided a copy here for all our clients to view our opinions.

Much is yet unknown of the timescales and outcome, however, our prediction is that the legislation is likely to come in for April 2019. If we look at what happened with the public sector changes, the dates marry up so closely in terms of release and closure of consultation etc., that there is sufficient time for HMRC to follow the same timetable as they did two years ago, such that it seems almost inevitable that implementation will be in April 2019.

This consultation is set against the back drop of the self-employed consultation, which seeks to redefine or codify the test for determining self-employment – the same tests which determine IR35. From the information we have gathered, HMRC are also set to bring in these changes in April 2019.

It is likely we will get draft legislation later this year. The Budget should be taking place in November, but there is speculation that this will be postponed to December, which would likely see any draft legislation hitting the public domain over Christmas and the New Year.

On the reasonable assumption that the legislation will mirror the public sector changes, agencies and end clients must start thinking about how they are going to address this. Almost every agency we have spoken to has said they could not assess all their limited company contractors in the space of a couple of months – they will need to outsource and start planning now.

Whilst the tests for IR35 are set to change, it is likely they won’t be too far removed from the current tests and we would encourage all end clients and agencies to review their contractors and begin compiling lists – not just those outside of IR35, but why they are outside (identifying which contractors have a right of substitution and which ones don’t; which ones have a lack of control and which ones don’t, etc.). This way any changes to the definition of IR35 will be more easily managed next year. We are already working with a number of our clients to work through their lists of contractors to help them draw up a matrix of “caught” and “not caught” services and sites.

We advise practitioners to encourage their contractor clients to engage with agencies and end clients to shore up relationships and a process of how to work together next year. We believe that there will be a number of insurance-backed due diligence solutions that can support the entire contractual chain and we would be pleased to discuss these with you. We have also been advising many accountants on how to set up and run their own umbrella company as a possible additional safeguard to their business.

Please take a look at our consultation response. If you have any questions about this or any of our services please contact us at taxcontractorsolutionsuk@markel.com. or call the office on 03450 660 035 and speak to one of our consultants.
Tagged IR35
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