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IR35 – The Ending of the Soft Landing Period

In April 2021, we saw the implementation of IR35 in the private sector. This meant that the hiring organisations became responsible for determining the status of a contractor, whether it is “inside” of IR35 (payroll working rule apply) or “outside” of IR35 (meaning the contractors can operate through their own limited company). The three key areas in which organisations are to look at whilst making these assessments are: mutuality of obligation, substitution and supervision, direction and control, however, there are a number of other contributing factors. 

As we approach the beginning of the new Financial Year, we edge closer to the ending of the “Soft Landing” period of IR35. HMRC implemented this for the first year of the new “off-payroll working rules” coming in. Investigations will shortly begin within the private sector to ensure that organisations are fully compliant with IR35. HMRC will contact businesses that they believe engage with consultants, to initiate the compliance checks. The main two areas that HMRC will look at are the hiring processes and how the business determines the status of the contractors. 

Reasonable Care is a key component of IR35, and it is important for organisations to review the status of contractors throughout the duration of the contract, at a minimum of every 6 months. Clients must not apply a blanket status assessment across all consultants, and individual assessments are key to an organisations successful IR35 strategy.  

The new financial year is another key landmark in the IR35 journey. The past year has allowed organisations to implement strategies and solutions to address IR35, and allow contractors to understand the changes that are happening. This point will also be pivotal for those that may not have compliant approaches in place, forcing adherence to the legislation, so it will be an interesting period to come. 

Here at CHR Life Sciences, we are able to connect you with certified professional bodies who will provide you with insured determinations, alleviating the stresses of IR35 for you and your business. Please do get in touch should you have any questions about your contract.