For contractors, having an assignment wrongly determined as inside IR35 is frustrating as it can have a significant impact upon their take-home pay.
As a recruiter, you may find that you need to support a limited company director through an incorrect IR35 determination. If you’re unsure where to start, below, we aim to help you through the process.
IR35 Changes: Public and Private Sector Reforms
April 2017 saw reforms to the application of the IR35 rules that affected the public sector. The responsibility to determine the IR35 status of assignments in public sector organisations shifted from the contractor to the public sector organisation. The incoming April 2021 reforms broadly mirror the public sector changes in the private sector; our article outlines all the changes. Within the latest reforms, we see the introduction of the Small Business Exemption - an effort from HMRC to ease the administrative burden on smaller companies. As such, the April 2021 reforms will only apply to medium and large companies although they will bring changes to the public sector also
How to assist a contractor who has been incorrectly placed inside IR35
Get in touch with an IR35 specialist
As a recruiter, your forte lies within finding great talent, identifying gaps in the market, sourcing great end hirers, and matching the two together. While it may seem daunting, the reforms to off-payroll working are manageable, with the right preparation. We have the expertise and tools to help you and your end hirers to manage these reforms. In addition to our significant in-house expertise we have partnered with QDOS, the IR35 specialists and are able to offer a full end to end solution.
IR35 specialists have vast experience, industry knowledge and can provide you with trusted advice that you can feed-back to the contractor and end hirer.
Speak to the end hirer
Reaching out to those who deemed the contract inside IR35 will allow you further insight into what led them to their decision; was it one small clause that you could ask them to re-word, or is it a factor that you (as well as the contractor) may have overlooked?
It could even have been an order from higher management that has been followed through without further consultation.
Speaking to the end hirer can help clear the air, build your relationship further, rectify an incorrect IR35 determination, or allow you to provide a clear answer to the contractor as to why they have been deemed inside IR35.
If the contract remains inside IR35 after reviews suggest otherwise, it’s important to remember that the determination is still the responsibility of the end hirer. However, from April 2021 the end hirer must exercise reasonable care when making this determination.
The April 2021 reforms will see the introduction of the client led disagreement process. SDS (Status Determination Statement) and debt transfer provisions which will apply equally to public sector and private sector organisations – read more about this topic here.
How can we help?
IR35 contract reviews – we mentioned that referring your query to an IR35 specialist is the best way to get expert advice. ClearSky Accounting (our sister company) can help you with this, and can be reached at 0800 464 0372, or via email on email@example.com
Umbrella Company option – if you’ve had the contract reviewed, contacted the end hirer, and the assignment is inside IR35 – you can advise the contractor that opting to work under a compliant umbrella company such as Parasol will mean that rather than becoming an employee for tax purposes only they will become our employee with full employment rights and protections.
Becoming our employee means they will no longer have the administration associated with running their own business, we’ll handle the administration, and make the PAYE deductions for tax and NI contributions as their employer. At the same time, they can expect to be paid swiftly and accurately, and there will always be someone available to talk to if there are any queries or concerns.
You can get in touch with us by filling out the form below, or reaching our Agency Support Team, by email on firstname.lastname@example.org, or calling 0800 464 0409.