Two particular challenges that will affect many businesses, aside from preparing for the festive season, are in ensuring due diligence around the 2020 changes to off-payroll rules, and compliance with data protection laws in the event of a ‘no-deal’ Brexit scenario.
Employment status of contractors
Following the introduction of the off-payroll rules for the public sector in 2017, the Government is extending these rules to bring the private sector in-line when it comes to employing contractors. From April next year businesses will be required to assess the status of their contractors in order to ensure the correct amount of payroll tax is being deducted.
The key issue for businesses to understand is whether or not a contractor should be considered an employee for tax purposes. Variations in the way contractors are engaged and where in the supply chain they sit can be complex, so it is important you act now to prepare for the new legislation.
Blake Morgan Partner and corporate tax specialist, Cathy Bryant, said: “The main issue for employers is to understand how the business engages with contractors and assessing the terms of those relationships. Using this due diligence businesses can respond to the ways this new legislation impacts their business and their relationship with their contractors.”
To help businesses with due diligence, Blake Morgan is offering a brand-new fixed fee consultancy service. Depending on the level of preparedness for the rules, the firm can advise on a range of matters – from an audit template designed to map contractor relationships through to reviewing and advising on contractor terms and conditions.
Cathy continues: “The new rules represent one of the biggest changes to contractor arrangements for many years. Whilst April 2020 might seem some way off, understanding your obligations and preparing to take action now will help ensure there are no nasty surprises come the next tax year.” Unless you count Brexit!
‘Deal or no deal’ data protection is crucial
Despite a Brexit deal being on the cards, British politics is impossible to predict, and data protection experts are warning business leaders that there’s no room for complacency over the implications of a no deal.
Elisabeth Bell, Blake Morgan’s data protection expert, warns that the region’s businesses could inadvertently fall foul of data protection laws should we exit the EU without a deal.
Most UK businesses are already familiar with the General Data Protection Regulation (GDPR), which contains restrictions on transferring personal data to third countries outside of the European Economic Area, while there are no restrictions on data flows between countries within the EU.
Elisabeth warns this could pose a significant problem for organisations that transfer personal data internationally, for example by using cloud services or outsourced data processing providers. She said: “In the event of a no-deal Brexit, the UK would automatically become a “third country” on leaving the EU. Data flows from the EU to the UK would, therefore, become subject to tight restrictions contained in the GDPR.
“The UK government hopes the UK will be granted an “adequacy decision” in recognition of the fact that we have equivalent laws. This would enable data to flow unrestricted between the EU and the UK.
But according to the Operation Yellowhammer report into the UK government’s no-deal preparations, an adequacy decision “could take years”. This will be too late for businesses relying on uninterrupted flow of personal data between the EU and the UK.
“This means that all companies in the UK need to urgently consider their data flows. If personal data is received from or sent to locations outside the UK, companies need to take action now. This includes checking current contracts and, where necessary, putting in place revised arrangements to ensure that there will be no disruption to those data flows.”
She continued: “A no-deal Brexit could have more profound effects for organisations operating in or selling into multiple jurisdictions in the UK and Europe. Some of these UK companies will need to continue complying with both the GDPR, as well as the new UK GDPR, after a no-deal Brexit.
If your organisation is in this situation, you should seek specialist advice on the steps you should be taking now to prepare.”
For more information on how to ensure your business remains legally compliant following Brexit, see our guide. www.blakemorgan.co.uk/data-protection-and-brexit-preparing-for-no-deal/