2021 - A Trio of Banana Skins

UPCOMING CHANGES BUSINESSES NEED TO WATCH OUT FOR

There are many important issues that seem to have been buried under the relentless coverage of COVID. Many of these will have a far-reaching impact on the construction industry and beyond, and desperately need addressing.

Apart from COVID, I see several upcoming changes that will affect the business world over the next 12 months. Of course, COVID has had a significant effect on our business. But as with any client-centric organisation, what we are really concerned with is what affects our clients’ businesses. There are three areas in particular that I believe will particularly impact our clients’ businesses in the next 12 months and in the years to follow.

1. Brexit:

It has not gone away! It will impact businesses in many ways but two related big issues for employers will be Recruitment and Right to Work (RTW). It has already reduced the level of freely available talent from the EU and will make recruitment more expensive and administratively cumbersome. Businesses need to be prepared for this as the transition period ends on the 31st December this year. We have been helping our clients get ready and provided assistance on how the rules affect their business and the types of documentation required from next year.

2. Domestic Reverse Charge (DRC):

This is a VAT change which will significantly affect most businesses in the construction industry. It was delayed last year because the industry was not ready for such an upheaval and further delayed due to COVID but is currently scheduled to be introduced from the 1st March 2021. It is a significant VAT change for construction. For many subcontractors it will mean that they no longer receive the VAT on their sales invoices so it will have a large negative effect on cashflow. Apart from the cashflow, they will also need to have in place the correct knowledge and systems to deal with this change.

3. IR35:

This is a tax change affecting ‘large’ businesses that engage professionals and others who provide their services through a limited company. This was introduced to the Public Sector in 2017 and we have helped clients affected by the legislation to deal with these significant changes. The rules have been modified and expanded in anticipation of being rolled out to the Private Sector. Like DRC its introduction has been postponed due to COVID. It is now scheduled to be introduced on the 1st April 2021. It is already affecting a number of sectors as many businesses have already made changes in anticipation for its introduction. Again, we expect more activity and preparation from businesses as we approach the deadline for its introduction.

With much of the current news cycle being taken up with COVID information and reports of social unrest, we are concerned that some of these points may be missed. However, it is vitally important that people are aware of the rules and regulations surrounding these areas, and how they will impact business.

There is still plenty of time to prepare for these changes but if you have not set this in motion now is the time to revisit it. We can help but your Accountant can too.

Ardent Tide are a leading CIS & IR35 compliance, audit and payment company specialising in the Construction Industry.

Dermot O’Grady, Chief Executive at Ardent Tide