The majority, or 74%, of UK organisations are not ready for the upcoming changes to off-payroll working rules, according to a poll from HR and payroll software and service provider MHR.

The off-payroll IR35 rules are being extended to include the private and voluntary sectors from April 2020. Previously, such checks have been carried out by contractors themselves.

MHR’s poll of 1,228 people who are responsible for IR35 preparations at their respective company found that 74% are not ready for the new rules, leaving the business exposed to potential rising costs and a significant skills shortage in the future.

Neil Tonks legislation expert at MHR, commented, “IR35 represents a significant change in the way organisations in the private sector employ and pay their contractors. Preparing for the change is no easy task with the process estimated to take three to four weeks to complete, so it is critical that companies don’t pay lip service to the new rules and treat IR35 assessments as an urgent priority to ensure they fully comply.

“Failure to correctly assess contractors could lead to backdated demands for unpaid PAYE, tax and NIC, and fines for delays and late submissions, not to mention reputational damage which could impact the ability to attract contractors and other temporary workforces, who provide invaluable flexible expertise.”

Tonks added that HR and payroll professionals have a key role to play in helping employers embrace IR35 rules.

Last week, a Harvey Nash survey found that 56% of private sector businesses in the UK admitted they don’t feel prepared for the revised IR35 legislation.

Another recent survey from the Morson Group found that 40% of contractors are unaware of the upcoming IR35 off-payroll reforms.