IR35 Reforms - Implications, lobbying and your help requiredPublish date: 23/03/2017
Helen Lynch outlines the work LLG is undertaking with Cipfa, SOLACE and the LGA on lobbying HMRC on the IR35 Reforms and how you can help by providing case studies.
Reforms to the tax regulations for the self-employed come into effect from 6 April 2017. The changes are in response to widespread non-compliance on payment of income tax and national insurance. From April, where local authorities pay an individual who is self-employed directly, through an agency or through their own limited company, the recruiting manager will be responsible for determining whether the new rules should apply. HMRC have developed an employment status tool which will help Managers determine whether the worker should be paid on PAYE. If a worker is to be paid on PAYE, Tax, National Insurance and Employers National Insurance and the apprenticeship levy will be deducted and paid to HMRC.
Potential implications for local authorities include liabilities if workers are incorrectly treated as outside IR35, increased costs for agency fees, impact on regional pay agreements for particular specialists (e.g. social workers) difficulties in interim recruitment and disruption in service delivery as a result of contractors leaving the sector.
The HMRC tool asks a series of questions, requiring yes or no answers, where the answer might not be that straightforward.Therefore, deciding how to answer the questions will require careful judgement by HR colleagues, assisted by Monitoring Officers and s.151 Officers.
The LGA, Cipfa and Solace wrote to HMRC in February calling for a delay in implementation to the rules but at present it appears that the rules will come into effect as planned.
LLG is looking to work with LGA, Cipfa and Solace to develop guidance based on case studies and perhaps a series of questions to consider when looking to recruit contractors, which will help identify whether a contractor will fall within or out of the IR35 rules.
To help us with this, we are looking for examples of issues/difficulties that colleagues have experienced when considering whether or not the IR35 rules apply. To share your experiences, please contact Helen Lynch, MO & Governance SAA Lead on 024 7683 1587 or email Helen Lynch
Please keep an eye on the LLG website for further updates.