Keeping Software Outsourcing costs low after IR35 enforcement

HMRC IR35 Offshore Outsourcing

From April 2021, HMRC starts to enforce IR35, which means UK Contractors will have to jump into a PAYE tax scheme if they apply to these rules:

  • a worker who provides their services through their intermediary
  • a client who receives services from a worker through their intermediary
  • an agency providing workers’ services through their intermediary

Generally speaking…

The rules apply if a worker provides their services to a client through an intermediary, but would be classed as an employee if they were contracted directly.

https://www.gov.uk/guidance/understanding-off-payroll-working-ir35

UK companies rely on contractors to temporarily boost their software development capacity. The reality is that a contract length starts at three months but are likely to extend to two or even three years. Getting a developer up to speed with code and processes can cost up to a month and not extending a contractor’s contract time is not only financially onerous but also impacts the final “go-live” date.

For IT contractors living in the UK, a possible solution could be to find a job abroad, whilst for UK companies, the way forward is to use of offshore manpower.

Techifide provides the right solution with Software Engineers located in South America, where the IR35 rule is not applicable.