What steps can a business take to reduce the risk of IR35 non-compliance?

Implementing a compliance process can seem challenging for businesses. Risk can be reduced by following these steps:

Assess IR35 status: It is essential to accurately assess the IR35 status of a business’s contingent workforce to ensure the correct tax is paid.

Take professional advice: Engage the services of IR35 experts to help your business implement the correct IR35 & off-payroll processes and be compliant with the rules.

Document the relationships: Detailed documentation should be created and stored for each contractor, including a written contract and any additional agreements, such as letters of engagement or statements of work, to demonstrate the relationship between the contractor and the business.

Manage contracts and agreements: Contracts and arrangements should be carefully drafted to ensure they accurately reflect the nature of the relationship between the contractor and the business. This minimises the risk of protracted disputes with HMRC.

Communicate with contractors: Work closely with contractors, treat them fairly and ensure they understand their status and the implications of the rules.

Stay informed: Keep up-to-date with any changes to the IR35 & off-payroll rules and take appropriate action to ensure compliance.

Implement processes and systems: Implement processes and systems to manage compliance with the IR35 & off-payroll rules. This should include procedures for assessing IR35 status, documenting relationships, and making the appropriate deductions from contractors' payments.

By following these steps, businesses can reduce the risk of IR35 non-compliance and ensure they comply with the rules set out by HM Revenue and Customs (HMRC).

It's important to note that the IR35 rules are complex, and businesses should take professional advice where necessary to ensure they are fully compliant. IR35 status is a legal matter, not an accounting matter, and experts from the appropriate field should be engaged.

Further resources:
https://www.ir35shield.co.uk/webinars https://www.ir35shield.co.uk/articles https://www.ir35shield.co.uk/getthebook