A new survey of mid-sized businesses has revealed that more than half do not have any processes set up for dealing with the IR35 situation, despite using contractors.
This survey by BDO found that 55% of these companies – close to six out of every 10 – have not set up any internal process for tracking the status of their contract workers. All businesses apart from small firms have been legally obligated to establish the status of these workers under the new IR35 rules since April of this year.
The results indicate that the reason so many firms have ignored this is the pandemic, and the statement by HMRC that it would adopt a ‘light touch’ approach to the issue. Many of those running the companies in question told BDO that they would sort the issue out once normality had resumed.
It is a risky approach for these businesses, and they would be advised to get help from accountants in Goole or wherever they are based that have expertise in IR35, rather than waiting.
Speaking to Contractor UK, Kate Cottrell, a contract reviewer, said that many firms were putting IR35 on the long list of issues to be dealt with post-pandemic, before adding:
“Another worrying aspect is that some small to medium businesses put efforts into doing something about the rules last year and with the delay, just stopped in their tracks.”
Cottrell concluded by saying that these firms were trusting HMRC and ignoring evidence of public sector firms being hit with sizeable bills under IR35.