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\n\tIt\u2019s no secret that the new IR35 tax legislation has made hiring contractors more challenging. The perceived hassle – and fear of getting it wrong – has left many businesses taking what they see as the line of least resistance: hiring fewer contractors – and only hiring inside IR35. <\/span><\/p>\n \n\tThis blanket approach of hiring all contractors inside IR35 is unsustainable – and ironically, could actually result in businesses breaching IR35 rules. We chatted to our own Gary Fay and Pete to find out why it\u2019s so crucial to correctly determine IR35 status and how to make sure you\u2019re hiring safely outside IR35\u2026<\/p>\n \n\tBusinesses are afraid of IR35. One of the fears is that you\u2019ll determine a contractor\u2019s status as outside IR35, get it wrong, and find yourself facing a hefty fine – or even business closure. There is some truth in this. The cost of an incorrect tax status can be huge. However, the response needs to change. Gary explains why burying your head in the sand and blanket hiring everyone as inside IR35, is not the solution: <\/p>\n \n\t\u201cThis can be \u2018close your business down\u2019 stuff, if you do not get it right – and that\u2019s why it\u2019s so weird that businesses haven\u2019t educated themselves about this.\u2019<\/p>\n \n\tWhen contractors are inside IR35, you are responsible for their tax and NI contributions. That means a contractor who used to cost you \u00a3500 a day, is now going to cost you around \u00a3650. <\/p>\n \n\tWhen you blanket hire everyone as inside IR35, in some cases you\u2019ll be spending much more money than you need to. Contractors who legitimately fall outside IR35 are responsible for their own tax and NI, so why process them as inside IR35 and waste money? Gary goes on to explain that the cost of proper compliance is actually far less than taking the shortcut approach.<\/p>\n \n\t\u201cOrganisations have come to the conclusion that it\u2019s far less risky to just push everyone inside IR35. This decision alone increases their costs significantly. Interestingly, the cost of compliance is actually far less than the blanket only hiring inside IR35. You could hire a contractor outside IR35, less risk, fully compliant, and significantly reduce the cost of your project.\u201d<\/p>\n \n\tPete clarifies just how significant this reduction could be:<\/p>\n \n\t\u201cAs we\u2019ve said, that \u00a3500 a day contract has now become \u00a3650. If you multiply \u00a3150 by 240 days a year, that\u2019s quite a lot of money (\u00a336k per contractor). The cost of changing the contracted work to a deliverables based approach and managing a contractor outside IR35 is much less.\u201d<\/p>\n \n\tFor a contractor to be deemed outside IR35, they need to be operating as a genuine contracted business. They are providing a service based on deliverables, rather than acting as an employee. The responsibility of determining this tax status correctly lies with you, the employer. <\/p>\n \n\tGary and Pete argue that a contractor\u2019s tax status isn\u2019t just determined by how they operate. It\u2019s largely down to how you manage your projects. They believe that if businesses change the way they structure their work, more contractors would naturally fall outside IR35.<\/p>\n \n\t \n\t\u201cOne thing that has to change is the way organisations manage contractors,\u201d Pete begins. \u201cIf they start moving to deliverable based work, I think what we’ll see is companies getting more value out of their contractors – and a lot of them will be pushed outside IR35.\u201d<\/p>\n \n\tSo what does this look like in practice? While inside IR35 contractors are treated much more like employees (daily management, regular check-ins), outside IR35 contractors operate much more autonomously. For this to work, you need to measure deliverables, rather than time. <\/p>\n \n\tOutside IR35 contractors set their own working hours, work unsupervised, and they work towards targets. It\u2019s the equivalent of someone coming to fix your plumbing: they have a clear goal to work towards which doesn\u2019t require overseeing or management.<\/p>\n \n\tWhile this would be a significant change for most companies, Gary and Pete explain why businesses that embrace this model will have an advantage:<\/p>\n \n\t\u201cCompanies need to embrace IR35 legislation and learn how to apply it. Those who use the new legislation and reset how their company uses temporary staff will succeed. They can actually use the legislation to drive more ROI from expensive contractors by making them more delivery focussed.\u201d <\/p>\n \n\t <\/p>\n \n\tImages via AdobeStock and Pixabay<\/a><\/em><\/p>\n It\u2019s no secret that the new IR35 tax legislation has made hiring contractors more challenging. The perceived hassle – and fear of getting it wrong – has left many businesses taking what they see as the line of least resistance: hiring fewer contractors – and only hiring inside IR35. This blanket approach of hiring all… Read More »How to hire safely outside IR35<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":14352,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"","neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[39],"tags":[],"class_list":["post-15128","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-news-trends"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/posts\/15128","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/comments?post=15128"}],"version-history":[{"count":0,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/posts\/15128\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/media\/14352"}],"wp:attachment":[{"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/media?parent=15128"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/categories?post=15128"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.identifiglobal.com\/af-api\/wp\/v2\/tags?post=15128"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\n\tThe cost of fear<\/h2>\n
\n\t” The cost of proper compliance is actually far less than taking the shortcut approach”<\/strong><\/h4>\n
\n\tWhen should you hire outside IR35?<\/h2>\n
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