IR35 is legislation designed to combat tax avoidance by both workers and the firms hiring them, which has been in force in the UK public sector and is due to apply to the UK private sector from April 2020.
Only applicable to medium and large companies, all of the major players in the retail sector will be impacted by IR35, in terms of additional cost, operations and their tax risk profile. Despite the new regulations only being a matter of months away, many employers are still not planning and accounting for these upcoming changes, possibly due to the number of objections and revisions IR35 has received and may yet still receive, subject to the results of the general election.
In retail, there could be significant disruption when you consider the number of outsourced work and temp staff involved. Away from the front-line retail staff, there are also design, marketing and extensive supply chains to consider, and there are severe potential penalties for non-compliance.
Although it remains to be seen how active the regulators will be and how harsh the penalties, it’s safe to say that advance planning and embracing of the new rules is the safe play, rather than risk being made an example of in the sector. One of biggest retailers, Amazon, for example, will be paying close attention to how IR35 unfolds. In the US, where IR35 does not apply, they recently paid bonuses to employees prepared to move from employee status to contractor status. If they offer that same incentive in the UK next year, without fundamentally changing the employee’s role, then they will not be complying with IR35 and be subject to a lawsuit and fines.
If you want to know more about IR35 and where you stand in relation to these new guidelines, either as an employer or a contractor, you can download our handy guide. And if you would like to discuss how IR35 might affect your hiring plans in 2020, contact us today.