Initial research from IIM found that 75% of contracts are deemed to be outside IR35, which is encouraging. However, it is concerning that some contracts had yet to be issued with an SDS, despite it being a regulatory requirement.
This might be because HMRC have said that they will take a soft view for the first 12 months of compliance, leading employers to assume that there is no rush to provide interims with their SDS.
However, that doesn’t mean that HMRC will forget the tax obligation.
Where there aren’t SDSs in place, and HMRC challenges an outside decision which is found to be inside, employers will be liable for tax. Any operating interim who hasn’t yet been issued with an SDS should ask for one.
The report also shows that senior interims are mostly continuing to persevere through their usual process of using a limited company, rather than opting for other solutions such as using an umbrella company.
Interim income is seeing a clear impact, with some reporting that they are experiencing a 20% drop in income having been deemed inside IR35.
Interims who are undertaking contracts through a provider should consider the way the provider is operating; how they will support their interims in terms of the net income received, particularly with an inside IR35 determination.