The latest thinking, news and events from the world of Recruitment

Employment Lawyer Issues IR35 Alert to Firms


A leading Midlands employment lawyer has warned private sector businesses to be fully prepared ahead of sweeping changes to rules on using contractors.

The alert has been issued by Sally Morris, partner and head of employment at law firm mfg Solicitors, ahead of the so-called IR35 changes which come into force in April which will see the responsibility for determining whether a contractor is “inside” or “outside” the business falling on an employer.

IR35 rules currently apply to public sector staff and were introduced by HMRC in 2000 to crack down on people avoiding national insurance and income tax by being employed through personal service companies. The rules are now being expanded to the private sector’s medium and large-sized businesses to make sure contractors pay the same tax as employees where required.

Ms Morris said:

“I am concerned that many businesses here are unaware of the seriousness and complexity of the new rules which will be ushered in from April.

“In many ways the rules are an unfair burden on businesses who rely on using specialist contractors as from April a number of liabilities pass over to them. This includes them having to be responsible for issues such as National Insurance contributions and employment taxes.

“It’s a weight many don’t need but must understand if they are to stay on the right side of the rules when they engage contractors. Those who don’t risk impact on their finances and their reputation.”

Ms Morris added that small businesses outside of the public sector should be exempt from the new rules but have to meet guidelines and conditions set out by HMRC to qualify.

The new tax cost could be as much as £1.3 billion in 2023/24.