IR35 | Businesses are NOT ready for tax changes

According to analysis conducted by the Association of Professional Staffing Companies (APSCo), around half of businesses are still woefully unprepared for changes to off-payroll working in the private sector – otherwise known as IR35 – which are due to come into effect in April 2020.

The new rules mean that changes to IR35 legislation, which were introduced in the public sector in April 2017, will be extended to medium and large private sector companies. From next year, businesses engaging independent workers will become responsible for setting the tax status of these individuals. As part of this reform, the tax liability will also transfer from the contractor to the fee-paying party in the supply chain, which is typically the recruiter or the company that directly engages the individual.

A survey of the trade association’s membership revealed that although more than three quarters (79%) of the professional recruitment firms polled believe that most of the businesses they work with are aware of the incoming changes, just 51% said the majority of their clients are actively preparing for the updated legislation.

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While this represents a notable improvement since July 2019, when just 12% of respondents said clients were putting plans in place to respond to the new rules, it also suggests that many are not doing enough to ensure they are ready for the changes.