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How will changes to IR35 affect the automotive sector?

How will changes to IR35 affect the automotive sector?

Tuesday, 10 March 2020

The changes to IR35 from 6 April 2020 will have widespread application across many industries, including the automotive sector. The affected industries are those that rely on engaging temporary workers either directly or via agencies.

The automotive sector will therefore be affected by the changes to IR35 as it employs many temporary workers including vehicle technicians, MOT testers, drivers, valeters and facilities management staff.

What do automotive businesses need to do?

Any medium or large business which is the ‘end user’ of these kinds of temporary services should be checking with whoever they engage with (if not the worker themselves, the agency etc) whether each temporary worker is using his or her own limited company for this purpose.

Under the new IR35 rules, if the worker is using their own limited company, you, as the end user, have certain obligations. In the first instance, you must carry out status determination tests and then communicate the results to workers and intermediaries. If, based on the status determination test, a temporary worker is deemed to be an ‘employee’, you’ll need to deduct PAYE/NIC etc from payments to their company, or make sure that whoever pays them does so.

What if the worker has done their own checks?

It can be tempting to rely on assurances from the worker or labour provider that they’ve already undertaken their own checks and that IR35 isn’t an issue, but the message is: Don’t! If a status determination should have been carried out but hasn’t been, or if you, the end user, have otherwise failed in your obligations, HMRC will hold you to account.

Where can I find out more?

Further guidance on IR35 is available on our website, including both for end users and contractors or intermediaries who may be receiving status determination statements. Alternatively, get in touch with a member of our Automotive team.

Call 0330 024 0888 or email enquiry@larking-gowen.co.uk.

John Weston

 

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