Contractors' Questions: How to prepare for SDC and IR35 version 2?

Contractor’s Question: How should contractors prepare for 'SDC' or IR35 'version 2' ahead of possible announcements in Autumn Statement 2015 and their proposed commencement from April 2016?

Expert’s Answer: In our view, both the proposed legislation outlawing tax relief on travel and subsistence expenses for SDC contractors, and the suggested reforms to IR35, are entirely linked.

Our main advice would be that all contractors prior to the Autumn Statement should think very carefully now if you are considering taking on a new contract, or renewal, which will take the contract beyond April 2016.

So we recommend that if there is considerable travel and subsistence costs at stake, ask yourself whether you would still take on the contract in the knowledge that you may not be able to claim relief on these costs from April.

Following on from this, it would make sense for contractors to have the ability to give notice should they need to. Although notice periods are consistent with employment and therefore not great for IR35, having a notice period could easily be argued as being nothing more than having a sound commercial tool to have in light of the government’s current proposals.

The expert was Kate Cottrell, co-founder of employment and IR35 status specialists Bauer & Cottrell.

Monday 26th October 2015