IR35 Legislation Changes
IR35 Legislation changes come into effect on 6th April 2021.
The IR35 legislation, which aims to ensure that contractors are paying the appropriate amount of tax, is also changing for some businesses in the private sector.
Currently, most contractors are required to determine their own status as employee or contractor. From 6 April 2021 the liability to determine a contractor’s tax status will pass to clients/employers.
Whilst IR35 legislation is a Tax Law, how does it impact HR?
Businesses now have to ensure that when they determine an individual’s Employment Status, they have to ensure they have considered all the variables. This has been highlighted recently in the Uber case where ‘Self-Employed’ drivers were eventually found by the Supreme Court to be Workers. This all came down to the level of control that Uber exerted over the individuals.
The common misconception at the moment is that if a contractor works for other clients, then they should be safe for IR35 legislation. The reason this is a misconception is that in 2015, the Government abolished the exclusivity clauses that businesses were putting into Worker Agreement’s which stopped them working for other businesses at the same time. Therefore, workers can also work for multiple employers without the need for consent like some Employees would require.
How to determine if someone is impacted by IR35 legislation
Unfortunately, there is no ‘simple answer’ to this question. Whether someone will be impacted by IR35 legislation all revolves around the level of control that a company exerts over the individual.
Common questions to ask yourself:
- Is there a requirement for personal service to be provided from that individual or do they have the unfettered right to substitution.
- Do you direct how they work?
- Do you direct where they work?
- Do you direct when they work?
- Do you direct what uniform they wear?
Case Study: Lorraine Kelly and Eamonn Holmes
A good case to look into to get an understanding of the complexity of the level of control that would be found to impact IR35 would be the findings in the Lorraine Kelly and Eamonn Holmes cases. Where Eamonn was found to be impacted by IR35, Lorraine wasn’t due to the significant differences in the control that ITV had over each individual.
Call for HR Help and Support
Employment Law can be complicated and we would advise any employer that is unsure about IR35 legislation to always seek advice.
At NORI HR and Employment Law we take away the stress and uncertainty of HR and Employment Law. You can contact us on 01254 947829 , view the our HR Consultancy plans here or take advantage of our HR Clinic