With just under three weeks to go until the IR35 deadline on 6 April, new information from business and financial adviser Grant Thornton UK LLP finds that over one in three (38%) mid-sized businesses are not ready for the transition.
Grant Thornton surveyed 605 UK mid-sized businesses on how prepared they were ahead of the deadline and located that over one in ten of those surveyed (13%) tried only minimal preparation or were in the early stages of their planning.
A further 25% had their preparations underway but were still not ready for the deadline.
From 6 April 2021 onwards, for big and medium sized businesses, the duty for determining whether a contractor is deemed a worker for tax purposes shifts towards the end-user of their services.
This means that organisations could certainly be liable for PAYE and National Insurance Contributions on their population of contractors within scope of the updated off-payroll working rules (IR35).
Only approximately half of the businesses surveyed (59%) believed they were ready for the upcoming changes.
Michelle Perry, associate director at Grant Thornton UK LLP, said: “The new IR35 rules can be difficult to navigate and therefore are likely to result in significant additional compliance burdens and employment tax considerations for many organisations.
“While the deadline gets ever closer, there is still time. Businesses should be taking action now to ensure that they've considered their position and effectively assessed the impact of the new rules and how it can be effectively and compliantly managed.
“As the theory behind the legislation is comparatively straightforward, there are many practical considerations when applying the new rules. These include how to identify contractors, the best approach to assessing their employment status, communication with relevant parties, potentially operating payroll withholding and managing potential disputes.
“Even though it presents an immediate compliance burden for a lot of, the preparation for IR35 also offers an opportunity for organisations to review their wider resourcing strategy to find the most effective and efficient way to create value from their people.
“Our research found that the preparation process for IR35 had provided many companies with the opportunity to reassess their wider people strategy.”