With the IR35 reforms coming to the private sector in April 2020, organisations who use flexible workers, known as Contractors, need to undertake reviews to ascertain if that worker falls within IR35 or not.
What is IR35?
Simply put IR35 legislation examines if a worker is engaged as an independent contractor, through their own business e.g. a limited company, or if in fact that they are a disguised employee and should be put onto payroll.
The whole area of IR35 is a complete shambles with years of HMRC attempting to apply the legislation unsuccessfully culminating in blanket new IR35 legislation introduced into the Public Sector in April 2018 with the same being applied in the Private Sector from April 2020.
Shifting of IR35 compliance responsibility
As Contractor UK explain:
“In April 2020, the responsibility for compliance with IR35 in the private sector is shifting from off-payroll contractors to end-users. The government stated that the new IR35 rules will impact 170,000 consultants, 60,000 end-users and generate additional tax revenue of £3.1billion between 2020 and 2024. The long and short of it? Many contractor relationships will need to be reviewed to ensure compliance with IR35.”
The end user is the company requiring a flexible workforce.
Clearly the review of contractor relationships needs to be undertaken and no doubt the end user organisation affected by this will bring in experts to help them to undertake these reviews and work out the IR35 status. It’s going to be big business!
As a firm of accountants we received a questionnaire from a company called MBO Partners, who told us that they were a contractor compliance and engagement specialist.
From their website it seems that they do provide a “comprehensive suite of independent contractor engagement service solutions make it safer for clients to do business with independent professionals”.
The issue is that the questionnaire that we received didn’t ask us about our end client but in fact asked us, as accountants, about how we operated our accountancy business.
It is unclear as to why or how the operations of an accountancy practice have anything whatsoever to do with the IR35 determination of a specific contractor.
Needless to say, my interest was piqued and my hackles were up. I wanted to know who were MBO Partners and what right did they think they had to ask us such questions using IR35 as an excuse.
Conflict of interest
So with the bit between my teeth I did a bit more digging to find to my amazement that MBO Partners in the UK and Ireland is run by Contracting Plus Limited who are a company offering Umbrella services to contractors caught within the IR35 legislation.
Far be it from me to suggest that there is a conflict of interest with a firm who is engaged by an end client organisation to check the status of their contractor work force but who also offer an Umbrella solution to any contractors who, as a result of a review, find themselves to be caught within IR35 and in need of an Umbrella company!
Is it only me that thinks this can’t be right?
What is going on in this industry?