IT contractors working in the public sector should renegotiate their contracts with the end client or their agencies quickly if they do not want to pay extra taxes when the IR35 reform is introduced in the first week of April 2017, according to Association of Independent Professionals and the Self Employed (IPSE) CEO Chris Bryce.
Bryce warned contractors that if the end clients insist on the contractors being under the purview of IR35 to avoid complications, contractors need to begin negotiating a new contract so that their interests are protected.
He said that if a contractor is working on a contract that was previously considered to be outside IR35, they could end up being assessed as being inside by an overly careful client to fulfil the compliance burden mandated under IR35. He pointed out that if a contract falls outside IR35, the contractor could be put on the client’s payroll. As a result, HMRC will raise questions about the previous contract. IPSE said that if the end client changes the contract to suit their needs, then the agency should also alter the contract with the IT contractor so that those changes are incorporated in it.
Bryce added that a change in IR35 status is a change in the contract, and this change is not covered by the terms of the contract. A new contract should be drawn up to safeguard the interests of the contractor as well as the agency.
IPSE will be working in collaboration with the Recruitment and Employment Confederation and the Association of Professional Staffing Companies to offer advice to interested agencies and contractors.
IPSE also warned contractors to get their invoices in early, especially if they invoice clients one month in arrears. If they do not invoice early, by 6th March, their payments will come under Pay As You Earn income tax when the IR35 reform kicks in.