Mergers & Acquisitions: The Implications for Contractor IR35 Compliance
As mergers and acquisitions become increasingly common in the insurance sector, contractors are facing new challenges in maintaining IR35 compliance. Such corporate restructuring can alter contract structures, modify work practices, and ultimately affect a contractor’s IR35 status. For both freelancers and companies, staying informed and taking proactive measures is key to safeguarding independent contractor status.
The impact on IR35 compliance
M&A activity often presents growth opportunities, but it also leads to a thorough review of existing contractor agreements. With new management in place, there may be a push for tighter controls, changes to project scopes, or a more centralized approach to contractor oversight. Even subtle shifts—such as adjustments in supervision, the use of equipment, or the right of substitution—can influence an IR35 determination. Contracts that were once considered compliant might suddenly fall within IR35, exposing contractors to financial and legal risks.
Strategies for contractors
Review your contract terms: After a merger, it’s essential to ensure your contract clearly defines your independence. This should include provisions that allow for substitution, grant you control over your schedule, and specify the use of your own tools.
Document your work practices: Keeping detailed records of your operations - such as project deliverables, communication logs, and invoices—can serve as proof of your self-employed status. This documentation helps demonstrate that you are not subject to the direct control of the hiring organization.
Consult an IR35 specialist: If you have concerns about your compliance status, seeking advice from an IR35 expert, like Vermelo, can be invaluable. Specialists can help you interpret any new conditions that arise from a merger and advise on necessary adjustments.
How companies can maintain compliance
Conduct a comprehensive IR35 audit: Review all contractor agreements to identify any changes in supervision, control, or integration that might affect IR35 status. Addressing these issues early is crucial to mitigating risk.
Clarify roles and responsibilities: Ensure that the roles of contractors are clearly defined and documented. This clarity reinforces the contractor’s independent status and helps maintain an IR35-compliant structure.
Educate your internal teams: It’s important for HR, legal, and project management teams to understand the implications of IR35. Providing targeted training can help ensure consistency in managing contractor relationships during and after mergers.
Vermelo: Your trusted IR35 compliance partner
Managing IR35 complexities, especially during times of corporate change, requires expert guidance. Vermelo is an IR35 and compliance specialist, we support both companies and contractors in overcoming IR35 and compliance challenges. From detailed contract reviews to tailored compliance strategies, our team is here to help ensure long-term success and minimise risk.
Contact us today at 01892 553360 or email info@VermeloRPO.com to learn how we can assist you in maintaining robust IR35 compliance.