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IR35 - Orion's Approach



As widely noted in the press, the Chancellor announced in his Autumn Budget the introduction of IR35 reform in the private sector effective from April 2020.

IR35 was introduced in 2000 and affects a contractor who does not meet the HMRC definition of 'self-employment'.  If a contractor is found to be ‘in-scope’ of IR35 then they are liable for increased tax and national insurance contributions.

The ‘off-payroll’ rules are not new as they were introduced to the public sector in 2017.  The primary aim of the reform is to move the responsibility to determine a contractor’s tax employment status to the end-user client and for the fee-payer such as Orion to be responsible for applying that determination, i.e. deduct tax and NI when required.

Whilst the Government confirmed that a second consultation will commence within a few months of the budget statement and that this may influence the Finance Bill legislation scheduled for publication in mid-2019, commentators do not anticipate significant changes.  As Orion already work in the public sector and have been closely monitoring developments, we are in an advanced stage of preparation to accommodate the anticipated statutory adjustments.

Contractor’ and clients’ interests are at the centre of what Orion do and we retain professional experts in our HR and Tax functions who have been heavily engaged in IR35 matters for 20 years.  Orion is likely to introduce a number of engagement process changes late 2019 ahead of the April 2020 reform date to ensure legislative compliance.  Each contractor will be directly involved in our validation process with their business and assignment arrangements directly influencing any in or out-of-scope determination.

IR35 determination tests are not changing and remain essentially as they were in 2000 when the original legislation became law.  The application of these tests and how they have been interpreted through case law is well documented and understood.

Orion remain focused on providing compliant solutions that benefit all parties engaged with out-sourcing activity, contracting services or procuring expertise and will continue to support and assist such arrangements.  

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