In April 2020, the ‘IR35’ legislation for contractors operating via a personal service company (PSC) will be introduced to large and medium-sized businesses. The responsibility for assessing whether a contractor is an employee for tax purposes will be shifted to the employer, meaning they could be liable for PAYE and NICs – a significant cost, tax compliance risk and administrative burden. The situation is even more complicated where contractors are sourced via agencies, and there may also be talent retention considerations.
HMRC has a tool (‘CEST’) which aims to help businesses identify whether a contractor is an employee for tax purposes, but its limitations have been well-publicised, not least as a result of losing numerous court cases. Therefore, it is widely considered not fit for purpose.
Grant Thornton has developed a genuinely market-leading AI platform to enable businesses to identify, monitor and assess their contractor population. Unlike CEST, it guarantees a decision every time, produces a comprehensive risk-rating report and audit trail, and monitors engagements to notify when re-assessment is recommended. Although HMRC cannot formally approve a third-party solution, they have stated that ours appears to demonstrate reasonable care, an important concept for mitigating IR35 risk.
We would be delighted to demonstrate our Employment Status Intelligence Platform to any business considering its IR35 preparations. Please contact me directly or book a demo from our website.