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Public sector bodies need to act now ahead of IR35 reforms

  10th February 2017       Louise Woodward (Chartered MCIPD)
 Accounting & Finance, Employment, Executive Search, Human Resources, IT & Software Solutions, Office & Commercial, Recruitment

 

It’s only a matter of weeks before the public sector IR35 reforms are set to come into effect, which could represent potential chaos for all public sector firms that hire contractors who will need to act now or risk losing contractors and the invaluable skills that provide.

Any public sector body that pays its contractors one month in arrears will need to receive invoices before 6th March and those that pay their contractors on anything more than 60-day terms will need to think about resolving invoices before 6th April. Public sector bodies will need to give proof to the recruitment agency that a contractor is outside IR35 according to the new rules or their contractors will have their tax and National Insurance Contributions (NICs) deducted at source.

It seems contractors are already considering a future outside the public sector so hirers and their advisors need to implement an immediate action plan in order to avoid losing them. This advice has emerged following HMRC’s guidance that invoices paid after 6th April 2017 for any work before that date will be subject to the new rules.

The first step is to take a free IR35 test available at IR35Testing.co.uk which flags up those public sector hirers which pay their contractors a month in arrears. It will also display the contractor’s IR35 risk on a spectrum allowing hirers to make a fully informed decision and minimise risks.

Dave Chaplin, CEO of ContractorCalculator commented:

“The fallout of the new rules for public sector bodies is potentially disastrous.  We have been warning public sector hirers about the impact of the new legislation for some time now so I would hope that they have been conducting due diligence and getting their ducks in a row to deal with the new reforms well before now.

“The reforms represent a potential car crash for all public sector bodies that hire contractors.  A poll we conducted last year told us that 80% of contractors plan on abandoning the public sector rather than accept a contract inside IR35 so it is important that hirers work closely together with their contractors now to establish a contractor’s employment status or else risk losing them altogether.”

“The timing of these reforms is causing utter chaos and already threatening an exodus of talent. This will have a significant impact on an already stretched public sector. Government projects rely heavily on contractor expertise and the whole point of hiring contractors via personal service companies (PSCs) is the public sector wants contractors, not employees, for short-term expertise on tap. The proposed reforms are already starting to potentially cause irreconcilable damage for all involved but we are where we are, so I would advise any ill-prepared public sector body to heed our advice and carry out our action plan without delay.”

Make sure you are prepared well in advance; Bond Williams are holding our next HR Seminar on: ‘IR35‘ in partnership with PKF Francis Clark; Chartered accountants and business advisers on Tuesday 14th March 2017. John Caithness, Employment Taxes Director and James Mc Dougal, Tax Senior at PKF Francis Clark will be joining us to talk you through what you need to know in regards to IR35 reforms. Full details of this event will follow shortly on our events page. If you would like to attend please email laura.webb@bondwilliams.co.uk.

Louise Woodward (Chartered MCIPD)

Associate Director

Louise is an experienced specialist accounting & finance recruitment professional with over 30 years’ experience specialising in the sector during which time she has gained an esteemed reputation as one of the region’s leading recruiters evidenced by her long list of loyal and happy clients. Louise is also Group Secretary …


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