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      IR35: 6 things Resource Managers need to prepare for April 2020

      By Annie Wigley     

      Come April 2020, Resource Managers are likely to be affected by a new rule: to assess whether the terms of engagement of contractors and freelancers fall inside or outside IR35.

      What does that mean?

      IR35 is a piece of tax legislation. It’s there to stop people enjoying the tax benefits that go with the risk and expense of being self-employed when the terms of their contracts are similar to those of payrolled employees. If a contract falls inside it, the worker pays the same tax and National Insurance contributions as a payrolled staff member, regardless of whether they work through a limited company, an umbrella company or operate as a sole trader. If the contract is outside IR35, they’re free to enjoy the tax benefits of that chosen status.

      Is IR35 a new thing?

      No, it has been around since 2000. What has changed is the who.

      As things stand, it’s down to the worker to declare on their tax return whether their earnings fall inside or outside IR35.

      But from April 2020, the end hirer will have to make that assessment. And as a Resource Manager, expect to be involved in getting your business IR35-ready.

      So, what are the next steps?

      1. Set up an IR35 steering group at your company. Include your colleagues in HR, talent and the heads of departments who rely on freelancers and contractors on a regular basis. Bring them up to speed on the IR35 legislation as everyone will be impacted by the changes in the legislation.
      2. Run an audit on your company’s regular freelance roles and the employment status of the freelancers. Consider if they have a limited company, are a sole trader, are paid via PAYE or use an umbrella company. This will give you an idea of the impact the law change will have on you.
      3. Create a process for assessing whether any existing or future role performed by a contractor or freelancer will fall inside or outside IR35. HMRC provides a tool known as CEST (Check employment status for tax) for this purpose. As well as the worker’s role, the tool evaluates factors such as:
      • who decides what work needs doing
      • who decides when, how and where it’ll be done
      • how the worker gets paid
      • whose equipment the worker will use to do the work
      • whether the worker can claim expenses (such as travel) from the hiring company or receive any additional benefits.
      1. Review your current freelance contracts and look again at contracts issued by your external recruitment partners. Make sure they allow you to answer the questions in CEST with confidence.
      2. Agree with your internal IR35 steering group and your external recruiting partners on how you’ll write your assignment contracts from April 2020 to include the mandatory IR35 SDS (statement determination status).
      3. Make it easy for yourself. At The Industry Club, we’ve set up a specialist IR35 support service specific to the creative comms industry. We’ll take you through the nitty gritty, get your processes running smoothly and help you stay fully IR35 compliant.

      It’s not long now until April 2020, so let’s get you ready in good time. Email us at to get things moving.