Grant Thornton launches new AI tool to help businesses navigate IR35 tax changes

Heather Smallwood

The firm, which has offices in Aberdeen, Edinburgh, and Edinburgh, believes the tool will be particularly be particularly well-received within the oil and gas industry, where companies depend on off-payroll workers.

Responding to the well-publicised limitations of the HMRC ‘Check Employment Status for Tax’ tool (‘CEST’), GT’s new ‘Off-Payroll Workers’ (OPW) client solution is designed to help organisations prepare for legislative changes set to increase their tax obligations in respect to contractors, often referred to as IR35.

In April 2020, the responsibility for determining the employment status of OPW will shift to the end client in the private sector, following the same earlier change in the public sector in April 2017, meaning businesses could now be liable for PAYE and National Insurance Contributions on their population of contractors.

Grant Thornton’s tool guarantees a decision every time and includes a risk rating flag highlighting the potential for challenge to the status decision, a database to store and monitor the status of the new and existing OPW population, and notifications for periodic reassessment of each OPW while they continue to be engaged. When an OPW is deemed to be employed, the tool provides practical guidance, including the agreed payroll operation and dispute resolution process.

Heather Smallwood, director of tax at Grant Thornton UK LLP, said: “Increasing focus on this area by HMRC is putting pressure on businesses that engage contractors, particularly within the Oil & Gas sector where the use of off-payroll workers is prevalent. The new rules can be difficult to navigate for businesses and many are still struggling with how to prepare for the changes yet to engage with IR35 but, leaving it too late could be costly. As well as the compliance aspects, IR35 also presents an opportunity for organisations to address their wider resourcing strategy to find the most effective and efficient way to create value from their people. Automating processes allows businesses to focus on other value-add activities, whilst offering peace of mind that risk in this area is managed.”

Grant Thornton’s offering builds on the firm’s experience with IR35 in the public sector, where blanket approaches to the legislation change in April 2017 have resulted in significantly increased costs of engagement and reduction of supply chain, particularly in areas such as IT and finance, where workers prefer to operate as freelance consultants.

Anita Eunson, director of Tax at Grant Thornton UK LLP, added: “Based on our experience with IR35 in the public sector we recommend that businesses consider their position now, rather than waiting until April 2020, to allow time for all the necessary stages to effectively manage the change and to properly assess the impact of the new rules.”