Remember when IR35 was the biggest thing to worry about? It feels like a life time ago now, and you may have even forgotten, given everything else that\u2019s been going on. But whilst it may seem like it\u2019s taken a back seat for the government, it\u2019s still very much at the forefront of our accountant\u2019s minds.\r\n\r\nSo what is changing, when is it proposed to happen and what do you need to do to prepare? In this blog we answer all those questions, keeping it nice and simple, so you can get back to focusing on the important things.\r\n\r\nFirst things first, what\u2019s going to change?\r\n\r\nThe rules for how to determine IR35 status aren\u2019t changing, and they didn\u2019t for the Public sector either. The only thing changing is the entity in charge of making the determination. Whoever makes the decision is expected to use reasonable care in making the determination, and judge each contract on its own merits.This therefore means:\r\n\r\n \tYour IR35 status determination will lie with the end-hirer\r\n \tThe end-hirer will bear the tax risk should they determine your IR35 status incorrectly\r\n \tThe rules surrounding how your IR35 status is determined aren\u2019t changing, therefore if you\u2019re working on a Private contract and it\u2019s legitimately \u2018outside\u2019 of IR35 come April 6th, you should be considered \u2018outside\u2019 by HMRC once the new rules take hold\r\n\r\nHow might this impact the contractor population?\r\n\r\nSome end-hirers may be nervous about bearing the tax implications should they incorrectly determine a contractor\u2019s IR35 status, and may therefore decide to only employ contractors who are using Umbrella companies, rather than being Limited (as Umbrella companies pay tax, PAYE and National Insurance Contributions at source).\r\n\r\nEnd-hirers may also make a blanket decision on their contractors they use and deem they\u2019re all \u2018inside\u2019 IR35, so as to not possibly be caught out.\r\n\r\nWhat are the possible implications?\r\n\r\nLimited Company contractors who are genuinely \u2018outside\u2019 IR35 and incorrectly classed will be made to work on a PAYE basis, and as a result lose out on the tax benefits which come with being truly \u2018outside\u2019.\r\n\r\nHow should the end-hirer determine your status?\r\n\r\nThere are three key tests which HMRC have laid out to determine your status, all of which the end-hirer must use \u2018reasonable care\u2019 when assessing. These tests, often referred to as \u2018MSC\u2019 are:\r\n\r\nMutuality of obligation: Relates to the extent you\u2019re obliged to complete work that\u2019s offered to you, or whether the client is obliged to offer you extra work that\u2019s outside of the contract. If your working obligations are clearly set out in the contract and work is limited to those obligations, this strongly suggests that IR35 does not apply.\r\n\r\nSubstitution: Are you able to send someone else in your place to complete your work? If so, even for a short period this demonstrates that your contract is \u2018outside\u2019 IR35.\r\n\r\nControl: The level of control your client has over your working practices can impact your status. The more control you have as the contractor when it comes to how, when and where you work, the more likely you\u2019ll be found \u2018outside\u2019.\r\n\r\nWhat does \u2018reasonable care\u2019 actually mean?\r\n\r\nYou client must be able to demonstrate that they have used \u2018reasonable care\u2019 when determining your IR35 status. Sadly many clients have very little knowledge when it comes to IR35, and therefore may make blanket status decisions without taking MSC into consideration. It is unclear how HMRC is likely to police the \u2018reasonable care\u2019 taken.\r\n\r\nWhat about CEST?\r\n\r\nSome clients use the CEST online tool (Check Employment Status for Tax), whereby they answer a series of questions about the contactors\u2019 engagement, and the tool tells them whether IR35 applies.\r\n\r\nAs CEST was designed by HMRC, contractors understandably aren\u2019t keen, and argue it\u2019s weighted in HMRC\u2019s favour. It\u2019s widely considered fundamentally flawed (even HMRC investigations have contradicted their own CEST tool), yet its decision is what your client will base their final IR35 status outcome on.\r\n\r\nWhat can you do to prepare?\r\n\r\nWhilst April 2021 may seem like a little way off yet, there are a few things you can do now to ensure you\u2019re ready for the change:\r\n\r\nKnow what to do if you don\u2019t agree with your client\u2019s decision \u2013 If your first contract post April 2021 is decided to be \u2018inside IR35 then you\u2019ll want to be ready to challenge that decision. You\u2019re able to process a \u2018client-led disagreement\u2019 which allows you to present your evidence to the client, who\u2019ll then have 45 days to respond to your appeal. Download our IR35 Survival Guide for more information on this, and also what to do if your client refuses your appeal.\r\n\r\nFind a specialist accountant \u2013 if you haven\u2019t already done so, make this your number one priority. Most accountants will have a broad understanding of what IR35 is, but only specialists will have the knowledge and experience to ensure they\u2019re doing everything they can to support you correctly. And if your status is incorrectly determined, a specialist accountant will be on hand to help you challenge it. Take a look at our dedicated IR35 page for more information on the services we offer Limited Company contractors.\r\n\r\nFind a solution that works for you, no matter your status \u2013 If you\u2019re found \u2018inside\u2019 but want or need to continue working on your contract, you\u2019ll have to pay PAYE, National Insurance Contributions and Tax at source. So how do you go about that when you\u2019re a Limited Company contractor? At SG Accounting our sister company, SG Umbrella, provides contractors in this exact position with umbrella services for the duration of their contract. Then, once the contract has ended we simply pass you back over to SG Accounting, it\u2019s as simple as that!\r\n\r\nFor more information about the services we offer contractors, or to simply have your IR35 questions answered by one of our director-level accountants, get in touch with the SG Accounting team today.