Many businesses organisations are being affected with the imminent changes to IR35 taxation laws from the 1st April 2020.
Does your organisation work directly with LTD contractors for off payroll solutions?
Are you aware you could be subject to legal investigation from HMRC which could result in financial penalties that may occur if not followed properly?
Do you fully understand how the changes affect you?
Are you confident you know how to be compliant?
Would you be interested in a solution which mitigates your risk but still allows you to engage with contractors?
What are the changes?
Whereas before it was the responsibility of the LTD company to determine their IR35 status it is now the client, of which is the fee payer, that will be responsible for determining the IR35 status of all PSC/LTD company contractors they are working with. As a result, this means you could now be subject to investigation by HMRC, the consequences of which could be legal action, large backdated tax bills and additional financial penalties.
How do I ensure compliance?
In order to comply with the new rules’ clients will have to use reasonable care to assess the working practices of each contractor and determine their IR35 status.
But what is reasonable care?
Reasonable care is the review, and documentation, of each and every contract engagement with a LTD company and their working practices to determine the IR35 status. This is evidenced in a document known as a Status Determination Statement (SDS), and one MUST be completed for every single engagement including contract extensions.
We will absorb the increased administration
For clients with multiple contractors across different the business this means a dramatic increase in administrative workload. Not only is this extremely time consuming and costly many organisations are unclear who within the organisation the responsibility should lie.
Woodrow Mercers will work alongside your business to absorb all the administration requirements. This will include a thorough review of each individual contract engagement to determine the IR35 status. At this point we will undergo a consultation phase where we will identify any grey areasthat pose a risk of the assignment falling inside IR35. We then work with you and recommend changes to ensure the role is determined outside. Once agreed we will produce a detailed SDS on your behalf which can then be documented as evidence reasonable care has been taken.
We will mitigate your financial risks
If after your organisation uses reasonable care to determine the IR35 status of all their LTD company engagements producing an SDS for each contract, there is still a of investigation by HMRC which could result in tax arrears and financial penalties.
By using Woodrow Mercers IR35 consultation we will indemnify all parties in the chain against any HMRC investigation which may result in tax arrears or financial penalties. Our insurance policy is underwritten by Zurich and provides cover up to £100k of legal fees and £100k of tax arrears/fines should in the unlikely event a court case be lost to HMRC. The indemnity is specific to EACH contract engagement and not a blanket cover.
Woodrow Mercer Solutions will provide all workshop preparation, solutions and functional consultants and guide each customer through the project journey lifecycle. The option to scale this business model up is available, with extra consultants available upon request.
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