- Date 22 Nov 2021
With HMRC’s ‘light touch’ approach to IR35 compliance enforcement set to end in April 2022, new research from Grant Thornton UK LLP’s latest Business Outlook Tracker* finds that the mid-market is still struggling to comply with the changes.
The survey of 605 mid-sized businesses finds that one in five (19%) are still not confident in their business’s compliance with IR35.
From 6 April 2021, for large and medium sized businesses, the responsibility for determining whether a contractor is deemed an employee for tax purposes shifted to the end-user of their services. Broadly, this means that organisations have new obligations regarding their population of contractors within scope of the updated off-payroll working rules (IR35) and could ultimately be liable for PAYE and National Insurance Contributions (NICs) on this population.
However, HMRC has confirmed that it will take a light touch approach to penalties until April 2022.
With only a few months to go before the ‘light touch’ approach ends, less than three quarters of respondents (68%) were found to be confident in their business’s compliance. With only 25% responding that they were ‘very confident’.
This latest research follows an earlier edition of the Tracker in January which found that only just over half of the businesses surveyed (59%) believed they were ready for the IR35 transition in April 2021. Over one in three (38%) were found to not be fully prepared for the changes.