We have recently been made aware that HMRC have started to contact all medium and large businesses, who may be affected by the extension of the IR35 ‘off payroll’ intermediaries legislation which comes into effect on the 6th April 2020.
Therefore, if you have 50 or more employees you are likely to receive a questionnaire to complete and an ‘opportunity’ for an educational telephone discussion with HMRC.
Although the completion of the questionnaires, or the opportunity to speak to HMRC, is not being described as mandatory, where previous similar questionnaires have been sent out by HMRC, a failure to respond has often quickly been followed by an HMRC Employer Compliance Inspection.
The second concern is that clients who have responded to the questionnaire, and then taken advantage of the ‘opportunity’ to discuss the IR35 implications, quickly find that HMRC use the call as a chance to ask very pointed questions about self-employed workers/consultants already engaged by the client, and the process used to decide their correct employment status. If HMRC consider that the processes in place are inadequate, they may opt to review the decisions made in more detail on the basis that there is a perceived risk.
At the moment, HMRC seem to be concentrating on the largest employers, but we expect that they will be cascading the contacts down to medium sized businesses over the next few months.
If you have concerns about the new legislation, and HMRC’s information gathering process, and would like to know more about how the legislation will work in practice, and how you can best prepare to deal with the implications for your business, during November, the Smith Cooper Employment Tax team will be holding seminars in their Derby, Nottingham and Birmingham offices.
If you would like to attend these events, you can find out more and register here.