It’s not long before the IR35 changes come into effect now. Recruitment agencies across the UK must be prepared to support their clients as the new rules become valid from April 2021. It is vital to work with a recruitment software system that can aid recruiters in navigating this important new legislation.

 

 

IR35 is legislation that decrees it is forbidden for certain types of workers and businesses hiring these workers to avoid paying tax. Genuine contractors or consultants are considered to be outside of IR35 and not affected by this new law. 

 

To put it simply, contractors can be declared as being inside or outside IR35 and they will need to pay taxes accordingly. Those who are inside IR35 are considered to essentially be employees of the firm hiring their services for clients. So, from April 2021, it is crucial for everyone affected by IR35 laws to pay the appropriate taxes. Failure to do so can result in hefty fines.

 

Being outside IR35 refers to the contractors who are proven to be operating their own business and are not employees. Neither they nor businesses who use their service will be impacted by the new law.

 

 

Recruitment agencies will find their clients turning to them for guidance in deciphering and managing this new change. Consequently, they need to be equipped with the knowledge and technical skills to handle the IR35 legislation. However, many recruiters will need help in navigating this obligatory rule as it can be a complex piece of legislation.

 

A good recruitment CRM will work as reliable IR35 software. It can flag contractors who do not meet the requirements to be deemed outside IR35. So, these contractors and businesses who hire them will need to pay proper taxes. The recruitment software can help recruiters figure out the complexities of back-office work concerning IR35.

 

1. Identifies placements as being within IR35 and goes ahead with relevant processing

2. Deducts tax and NI at the source so contractors are only paid what they are due

3. Provides invoices giving a full account of NI, tax and pay breakdown

 

These are just some highlights of the crucial tasks that recruitment CRM is capable of. Agencies who are serious about delivering the best service to their clients must use good IR35 recruitment software. It will make work easy for recruiters who can then confidently provide the best service to clients.

 

 

As mentioned above, there are substantial fines to pay if the government considers contractors and businesses to be circumventing the law. There will be an IR35 enquiry process where contractors/businesses are expected to provide documentation proving how IR35 doesn’t apply to them.

 

But if the government believes the evidence to be flimsy or inadequate, then taxes and NI contributions, as well as interest due on these amounts, will have to be paid to the HMRC. A penalty is also likely to be attached to the payments due.

 

These heavy fines can adversely impact businesses who could then potentially find themselves subsequently struggling to stay in business.