As briefly mentioned earlier on, the worry for businesses is the IR35 risk they will soon shoulder.
IR35 liability can mount up considerably, with the cost of non-compliance running into tens of thousands (if not much more) just for one contractor.
However, this is not a reason not to engage contractors and make risk-averse policy decisions, though; more an incentive for businesses to mitigate the risk and focus on ways to protect the liability they will soon carry.
By taking the right steps, this is simple enough to achieve. Businesses can protect outside IR35 determinations with IR35 insurance, which will cover the cost of expert advice, legal representation along with any resulting fines, interest and tax liabilities owed to HMRC.
While HMRC has promised not to hand out penalties for the first 12 months for mistakes made by businesses, I would like to point out that this will not stop the tax office demanding missing tax resulting from incorrect IR35 status decisions.
True, HMRC might not fine companies for one year, but they will expect missing tax payments to be made - and when it comes to IR35 cases, the tax liability exceeds penalties by a staggering amount.
In the coming weeks and even following the introduction of IR35 reform on 6 April, the businesses that take a sensible approach to the changes - and continue to engage contractors - will be in a strong position to navigate the many challenges they find themselves facing in 2021 - whether that is the economic uncertainty created by the pandemic or the repercussions of the UK’s departure from the European Union.
Through prioritising fair and well-informed IR35 status decisions over unnecessary - and frankly short-sighted - blanket bans, these firms can even gain a competitive advantage over their competitors with regards to attracting and retaining the very best flexible talent. After all, contractors simply want a fair shot at having their tax status assessed accurately by their client - wouldn’t you?
My parting message is clear. IR35 reform should not stop businesses from compliantly working with contractors outside IR35.
Through fair and thorough assessments supported by insurance, organisations will be able to engage this vital, skilled and flexible workforce for years to come.
Seb Maley is chief executive of Qdos
