Until now end clients (the hiring organisation at the top of the supply chain) haven’t had to worry about IR35. A client could engage a contractor, pay them gross, and sleep soundly. The government intends to change all that. It wants clients to be legally responsible for determining IR35 status, and liable for IR35 decision it may have got wrong.
This is an unwelcome development for clients. Very unwelcome. If the changes go ahead as the government intends, they will have to wrestle with IR35 as contractors have done for the last twenty years.
If clients decide IR35 applies, its likely contractors will seek an increase in their day rate, or they could simply terminate their contract. If they decide it doesn’t apply, but are later proven wrong, HMRC might come after them for the tax that it says should have been deducted.
However, if clients put in place a few simple measures, they can continue to use contractors as they have previously, with very little fear of reprisals from HMRC.
See our quick guide for clients and contact IPSE for more information on how to mitigate your IR35 risk
- Fighting IR35
- What's wrong with IR35?
- IR35 Defence
- IR35 news
- A Guide to IR35