Who is responsible for IR35 compliance? This is arguably the most important question facing the UK’s sub-contractor industry, however, for many businesses and individuals, whose services are rendered and paid for via limited companies in potentially complicated contractual chains, the new IR35 seems like a total grey area. Thankfully, this guide aims to answer all your questions surrounding IR35 compliance along with many other self-employed pay management and payroll queries, so read on to discover more.
The Latest Advancements of April 2021
In April 2021, the responsibility for compliance with IR35 in the private sector shifted from off-payroll contractors to end-users. This is likely because in July 2019, the UK government published a draft IR35 legislation in the Finance Bill 2019, which outlined plans for the rollout of the new framework to implement the shift along with other related measures. The government announced that the new IR35 rules will impact around 170,000 consultants and 60,000 end-users while generating additional tax revenue of more than £3.1 billion between the years 2020 and 2024. This means that a vast number of sub-contractor relationships will need to be reviewed to ensure total compliance with IR35.
What Does This Mean In Action?
Under new IR35 off-payroll working rules, it’s the end client who is in receipt of the contractor’s service, so the fee payer is the company who pays for their labour. In their role as the fee payer, they must take the time to deduct income tax, Employee National Insurance Contributions and, if applicable, the Apprenticeship Levy if the contractor’s engagement is caught by the IR35 rules. If a worker’s employment status is safely within IR35, then their invoice must be settled only once the correct taxes have been deducted. They must transfer payment of withheld monies to HMRC by the 22nd of the following month, submitting information on payments made and monies withheld under the Real Time Information system. Where a supply chain is involved, it’s best practice to carry out due diligence to be certain of every organisation involved – it’s a good idea to send out your IR35 status determination statement to the closest party in the supply chain for clarity.
Several steps can be taken to ensure compliance with IR35. These include:
- Ensuring that the worker’s company is registered with HMRC
- Providing HMRC with accurate and up-to-date information about the workers employed by the company
- Keeping records of all payments made to workers
At Pebble we understand just how mind-boggling this compliance and payroll, in general, can be, and that’s why we offer a coverall service for sub-contractors. For a small fee, it can help you to pay the right tax and get the right insurance so that you don’t have to worry about a thing. If you are a self-employed worker or contractor who is worried about the tax, insurance, and liability side of your job, then Pebble is the solution. IR35 is an important responsibility, so reach out today to discover more. Our friendly team of experienced, qualified professionals can be of great help for self-employed individuals seeking support with their payroll, as time-saving money management is our speciality. What are you waiting for?
