contractors & agencies: how to prepare for April 2017's IR35 changes?

Contractors & agencies: how to prepare for April 2017's IR35 changes?

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Since it is clear that IR35 changes in the public sector will apply from April in 2017, agencies and contractors have to now get themselves sorted to operate without any hassle under the new framework. HMRC, who has begun work on the new IR35 tool, will roll it out online from late autumn this year.

Naturally, this change won’t be welcomed with open arms. According to a recent survey of 95 of HR managers working in the public sector, 69.5% believe the introduction of the tool will either reduce their ability to attract talent or put up such outfits’ wage bills.

Fear is in the air for contractors and agencies as there is a strong chance of everyone being affected due to this. The same survey concluded that the IR35 tool will prevent the public sector from accessing the specialist skills it needs to deliver vital public services.

What should PSC contractors do?

First off, they need to understand their current position – whether or not they fall out of IR35 and for this, proper advice should be taken from appropriate experts. Beyond this, it is difficult for contractors to do anything else. Estimating their position and ensuring their documents are in place are the two things they should focus on right now – till further news comes their way from HMRC.

What should agencies do?

By the looks of recent contractor news and HMRC updates, a rewrite of the IR35 accounting information looks very much possible. This means the agencies need to speed up with everything related to IR35 to be ready from the beginning of next year.

The PSC contractors, caught by the new framework post April, will have to deal with making the returns to HMRC – that already have had tax and NIC deducted by the agency. This is why agencies should be able to efficiently raise the “outside IR35” assessment with the contractor and his or her work of place.

They need to understand what their obligations and potential liabilities will be and evaluate contracting workforce before the dreaded April arrives.

Even though having confidence in the tool is going to be a critical to the success – as of now, that seems far from possible – especially as no one yet has had sight of it. 

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