IR35: Planning for April 2021 – should I stay or should I go?

[cojak]

Do you mean client, rather than employer?

Dammit you’re right. I’ll change...

(Thanks Alchemy.)

[jamesbrown]

Do you mean client, rather than employer?

Employer for tax deeming purposes

[Alchemy Accountancy]

Basically, if you think that your employer is going to decide that you are inside IR35, you need to consider whether to leave that client

Do you mean client, rather than employer?

[jamesbrown]

Cool. Thanks for creating this - will be great to have somewhere to point folks in the first instance.

[cojak]

Nice, thanks.

Minor quibble



I would update that to client. The end client always determines status and issues the SDS, and the fee payer always deals with a fee payment based on status. The end client and fee payer may be the same in some cases.

I’ll change it.

[jamesbrown]

Nice, thanks.

Minor quibble

It is the feepayer who decides that, not you (or your contract reviewer).

I would update that to client. The end client always determines status and issues the SDS, and the fee payer always deals with a fee payment based on status. The end client and fee payer may be the same in some cases.

[cojak]

So, it’s (nearly!) October 2019 and if you haven’t already, now is the time to start planning for the IR35 changes in April 2020. [Note: The Government delayed this by a year, so I've updated the dates in the following post.]


Just to be clear – IR35 itself isn’t changing; the change is who decides whether your role is inside or outside of IR35. It is the client who decides that, not you (or your contract reviewer).

First, here are the new rules from the Horse’s Mouth. Read them:
Understanding off-payroll working (IR35) - GOV.UK
April 2020 changes to off-payroll working for clients - GOV.UK


Awareness, not guidance

In this thread I am NOT going to tell you what to do. Your decision comes down to your attitude to risk. If you think it’s unlikely that HMRC are going to start looking closely at your tax position in the future, then you don’t really need to do anything.

But if you feel uneasy about this, maybe it’s time to take stock and decide what you are going to do.


What is the problem?

There is no problem if your outside IR35 contract ends before April 2021. It was reviewed and your working practices show that the outside review was a valid one.


The problem as I see it is if you are currently in an outside IR35 contract but your client decides that your role will be inside IR35 at your next extension or after 6th April 2021. HMRC may look at the months before the switch: “if you are inside IR35 now, you should have been inside IR35 then”.

There is evidence that this happened in the public sector when things changed for them
IR35 inspectors to probe public PSCs retrospectively


What can I do?

Basically, if you think that your client is going to decide that you are inside IR35, you need to consider whether to leave that client.

We need to remember that none of this is definite, but I’ve been around long enough to have a fair idea where this is all going, hence this thread.

I don't know that this is actually going to happen, or when it might happen. I make my own determination of the situation based on previous observation of HMRC's ethics, methods and tactics, and the risk that they will be applied in the future with regard to the new world of IR35.

If people ARE in business on their own account, they should be familiar with calculating risk versus reward and determine their own manner of mitigation in light of being informed of the possibilities.

Basically - contractors are big and ugly enough to decide for themselves once they have the information.

It's called making an informed decision.


Note: I've removed the invoicing dates to make the post clearer, as that became out-of-date due to HMRC clarifications in 2020, there are references to that in the posts below though (just in case anyone gets confused...)