IR35 myth busting! 8 essential and practical tips for in-house counsel

IR35 myth busting! 8 essential and practical tips for in-house counsel

The forthcoming changes to the off-payroll working rules (IR35) are a tricky area to manoeuvre.

Thankfully, with the help of experts from LexisNexis, Taxation Magazine, Radius Law and from F-Lex legal, we were able to provide concerned in-house counsel with a place to learn more about the changes, share experiences and ask questions at our most recent Flying Solo Senior Counsel event attended by over 180 participants.

Speakers included Sandra Martins, head of employment at Radius Law, Andrew Hubbard, editor in chief of Taxation magazine published by LexisNexis and Sophie Gould from F-Lex legal, who facilitated the discussion.

Top three concerns for legal departments

Our participants told us that their main concerns surrounding the changes were compliance, tax, liability and the interrelationship of the three and also highlighted general concerns around the difficulties in understanding the changes.

Of those who participated in our polls during the session, over two thirds felt their business is only partly prepared for next month’s changes and more than half had not yet decided how their organisation will engage with consultants from 6 April.

IR35 – an economic issue at its heart?

Andrew provided us with background and context to the issue, which he felt is more of an economic issue, than a purely tax or legal one, as, at its core, it is focused on determining how much money goes to the government and how much to the worker.

For further background and practical considerations, visit our Practice Note: IR35—off-payroll workers, produced in partnership with David Smith of DLA Piper, for a comprehensive guide to the off-payroll IR35 regime.

8 essential tips for in-house counsel

Sandra talked participants through a few myths regarding the changes and recommended these 8 practical steps on what in-house counsel can do to prepare and make sure your organisation remain compliant:

  1. Undertake a full audit of the existing contractor workforce and determine how the company wants to engage with these people going forwards
    1. who should bear the costs of any potential implications of the changes?
    2. would it be useful to offer an employment contract?
  2. Enter into a dialogue with contractors—this is not just an issue for HR, but also one for general counsel and those commissioning the work
  3. If you want to remain out of the IR35 regime you will probably need to give up a lot of control over factors such as how the work is done or who is doing the work—will it be worth it?
  4. Consider whether outsourcing would ease some of the pressure on the company
  5. Carry out a status determination statement (SDS) on relevant contractors and issue this to the worker and the party the client contracts with
  6. Put in place an IR35 policy and processes to identify challenges
    1. keep records on relationships with contractors and review them at least once a year
    2. train managers on how to comply with the new rules
    3. update relevant privacy notices to provide for information sharing under IR35
  7. Determine who has the upper hand between contractor and employer and draft your contracts accordingly
  8. Review contracts with intermediaries

 

The Uber decision – what does this mean for legal teams?

Our hosts answered a range of questions on the new regime, including whether the judgment in Uber BV and others v Aslam and others - one of great importance as an explanation by the Supreme Court of how worker status is to be assessed - will change things in this area.

The judgement held that whether a contract is a ‘worker’s contract’ is not to be determined by applying ordinary principles of contract law. Rather it is a matter of statutory interpretation, not contractual interpretation.  As such, it is important to regard the purpose of a particular provision and to interpret its language, so far as possible, in the way which best gives effect to that purpose.

Further, the Supreme Court therefore looked at the relative degree of control exercised by Uber and drivers respectively over the service provided to passengers.

For the full story and practical implications of this judgment to consider, you can read our news analysis on it here.

More questions on IR35?

Our hosts answered a range of questions on the new regime including how overseas companies or companies with international connections should deal with the changes.

If you would like to find out the answers to these, sign up to the free to join slack channel. This online forum is an extension of Flying Solo - a forum for sole in-house lawyers or those in small teams. It is run by a committee of in-house lawyers and facilitated by LexisNexis, Radius Law and F-Lex Legal.

Our IR35 – your key questions answered’  blog post also provides additional guidance to questions such as ‘As an end-client, what practical steps should I be thinking about?’ and ‘Does a contractor who falls within IR35 then become entitled to rights under the agency worker regulations?’

 



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About the author:
Gloria is a Paralegal in the Lexis®PSL Paralegal Hub. She graduated in International Law and Globalisation from the University of Birmingham in 2019 and has been at LexisNexis UK since March 2020. She has experience working for US, UK and Italian law firms on a range of matters, including IP, financial services and IP law.