IR35 Netive VMS

The return of IR35

This time last year, in a world possibly free of the grips of Covid 19, there was another wave of fear sweeping the world of workforce engagement. That fear was around IR35, a piece of legislation due to take precedence in April 2020. Due to the impacts of Covid 19, the implementation of the legislation was delayed until April 6th 2021. We find ourselves now a year further along in time, with a couple of months until IR35 becomes applicable to the private sector, and again we see a lack of understanding and strategic focus to overcome the complexities of IR35 compliance.

IR35 is ultimately designed to incorporate measures to counter tax avoidance by the use of so-called “personal service companies” to ensure that contractors, who effectively act as ‘disguised employees’, pay the appropriate tax and national insurance as per an employee. It means a determination must be made to understand whether a contractor sits in, or outside of IR35. Where a contractor sits in-IR35, the same taxes are eligible to be paid, and similarly, employee benefits may be made relevant to the worker. To be operating out-IR35, a contractor is able to remain responsible for their taxes as usual.

What is significant as part of this, is that the responsibility, thus liability for determining and complying to IR35 status is passed from the contractor to the organisation engaging them. This presents a significantly increased exposure to risk for hirers, and makes it crucial that they implement the appropriate changes to their processes to ensure IR35 compliance.

At Nétive VMS we have anticipated this reformation by supporting the ability to track IR35 in our system, and we have made this available to our customers since March 2020.

How has Nétive prepared?

Nétive VMS has appropriately prepared for the changes in IR35 legislation, something we originally planned for in line with the April 2020 legislation change. At this time, we added a variety of functional items to ensure we could support our partners and clients in their own journeys to IR35 compliance. We made this available to our partners back in March 2020, and so ensuring we could provide them with as much runway as possible to prepare for the eventuality of IR35 being implemented. This IR35 functionality can be made available by a configuration change within the compliance management system, and can be incorporated to relevant programmes.