IR35 implications for consultants

The changes to IR35 (or off-payroll working) on 6 April 2021 had implications for external HR consultants in terms of the clients they advise and for themselves. Whilst IR35 is a tax issue and your clients should take appropriate tax advice, there are wider employment status implications where HR guidance may be required. This means your clients need to be aware of the status of any consultants they’re engaging, while HR consultants themselves need to understand the impact of changes to off-payroll working rules in how their services may be engaged.

The rules apply to:

• all public sector clients
• medium and large private and voluntary sector clients.  

Private sector companies and voluntary sector organisations are considered medium and large-sized if they meet two or more of the following conditions:

• have an annual turnover of more than £10.2 million
• have a balance sheet total of more than £5.1 million (the gross amounts shown as assets before deducing any liabilities)
• have more than 50 employees

If your client does not meet two or more of the conditions, they will be classed as a small-sized client under the off-payroll working rules.