Preparing for IR35 – a checklist of everything you need to consider and start doing now
The IR35 reform has been talked about, planned and postponed, but as we inch ever closer to April its myth is quickly becoming a reality. Whilst we’re unable to stop it from happening, we can ensure we’re all ready for it.
In this blog we explore the top things a Limited Company contractor should be considering now and start preparing, so that come April you’re ready to hit the ground running.
Know what to do if your contract is outside IR35
As the status determination process from April will now be 100% in the hands of the end-hirer /client, regardless of whether your contract is public or private, it’s a good idea to understand your options if you’re found inside:
- Argue your status: If you believe a blanket status has been placed upon you, or your client has simply given you the wrong status, you are able to dispute it by initiating a client-led disagreement. This process begins by you gathering evidence to show how you believe your status should be outside. You’ll need to get your accountant to review your contract, working practices and terms of employment, plus you’ll need to run your contract through HRMC’s CEST tool. Our blog: How to challenge a client’s IR35 determination shows you the process in detail.
- Get to grips with CEST: HMRC’s CEST tool (Check Employment Status for Tax) has been created to aid end-hirers / clients in determining a contractor’s status. Whilst there is some controversy surrounding the tool, it’s worth understanding that so long as the answers given during the determination process are 100% truthful, HMRC have stated that they will stand by the tool’s final decision. If you need to dispute the status your end-hirer / client gives you, then you will need to use CEST in order to do so. Get ahead and take a look at it now.
- Consider your options: If after you’ve disputed your status you’re still found to be inside, it’s time to consider your options. Do you:
- Leave the contract and go elsewhere
- Contract under an Umbrella company for the duration of your contract
- Keep contracting through your Limited Company and just pay the associated tax and National Insurance Contributions (NIC) with being found inside IR35
Whatever you decide to do, we strongly advise running your decision past your specialist contractor accountant first, to ensure you’ve done absolutely everything you can to try and change your status. They will also be able to advise you on your best option, based on your personal and professional circumstances.
Decide whether to take a contract that’s inside IR35
Out of choice no Limited Company contractor would take an inside IR35 contract over an outside one, but in some circumstances it may make sense to do so.
Financially: If you’re experiencing a bit of a dry spell or the money from the contract will keep you ticking over until your next contract, then accepting it might be your best option.
Professionally: Will the client open doors to future, bigger contracts? Will it put you in a good position to attract other clients in the future? Or maybe the contract will give you portfolio the boost it needs? If the answer is ‘yes’ then it’s worth looking at the future bigger picture, and how taking a financial hit now could pay off big time in the future.
Logistically: Unless you have a guaranteed permanent role in the pipeline, rejecting an inside IR35 contract to then go on a permanent job search could take up a lot of your time and effort. By rejecting the contract you’d also lose out on guaranteed work, so it’s worth asking yourself if it’s worth it.
Enlist the services of a specialist contractor accountant
IR35 is a tricky topic, and even the most seasoned contractor may not know IR35 and its intricacies as well as a specialist contractor accountant. There’s a reason why they study for so many years to become experts in their field, so instead of trying to do it all yourself, let them deal with IR35 and remove you from any possible mistakes and extra headaches.
A specialist accountant will also be able to provide additional IR35 services, such as contract and working practice reviews, support you through any client-led disagreements should you feel your status has been incorrectly determined post April, and if they have such capabilities (which SG Accounting does) have a sister company, SG Umbrella which can set you up with Umbrella services for an additional monthly fee whenever you need them. Don’t wait until April get all your ducks in a row, start looking for an accountant you’re happy with now.
How SG Accounting can help
We specialise in the complex needs and tax affairs of Limited Company contractors, and are able to advise and guide you on all IR35 matters. From disputing your status and beginning a client-led disagreement, to reviewing your contract, working practices and employment terms, our team are here to guide you now, through to April and beyond. Take a look at our IR35 services here, or if you’re ready to speak to one of our accountants, get in touch today.
Note: All the information and advice in this blog post was correct at the time of writing.
