April 2021 will see a significant impact to the IR35 rules around off payroll working in the private sector, affecting any worker providing services via a Personal Service Company (PSC) or Limited Company. These changes can be complex to navigate for both clients and candidates and essentially have been put into place by HMRC to ensure contractors pay the correct amount of tax, if they are found to be in “disguised employment”. Here at Just Interims, we are here to support, offer guidance and solutions to ensure that every element of procuring contractors is compliant.
We work with industry leading IR35 experts and can facilitate:
Case-by-Case IR35 Status Determinations (SDS)
Tax Liability Cover for all formally qualified “Outside IR35” determinations
IR35 “Health Checks” – advise on the impact of IR35 reform on your organisation
Assessment of your current contingent workforce
Full policy /process review and contractor engagement manuals
Training sessions, workshops and roundtable Q&As
Working Inside IR35?
Just Interims works with FCSA/Professional Passport/APSCO accredited umbrella partners and can guide contractors through the process of moving to umbrella employment. Our umbrella partners will provide transparent take home pay illustrations and manage the employment taxes, holiday pay, pension contributions, whilst providing access to their employee benefits schemes.
IR35 Frequently asked questions
What is IR35?
IR35 refers to the United Kingdom's anti-avoidance tax legislation designed to tax 'disguised' employment at a rate similar to employment.
What are the changes to IR35?
The UK's IR35 legislation ensures that contractors pay the same Tax and National Insurance contributions as an equivalent employee. New IR35 changes will be implemented in April 2021 for private sector contractors that will transfer the responsibility from contractors to large and medium companies to assess IR35.
What is the Status Determination Statement (SDS)?
Under the new rules, the end-client (organisation the contractor is providing work for) is responsible for establishing whether or not an engagement is inside or outside IR35. Therefore, they need to produce a Status Determination Statement (SDS) declaring a contractor’s deemed employment status, following an IR35 assessment, with clear reasons for reaching the conclusion. Previously, this determination was left to the contractor’s limited company to decide. The end-client must make an SDS using reasonable care (see question below), and pass the document, plus the reasoning behind the decision, to the worker and every party in the supply chain until it reaches the fee-payer (i.e. the business directly paying the contractor).
Significantly, if any party in the supply chain fails to pass the SDS to the next party in the chain, then they will become the ‘fee-payer’, responsible for deducting the worker’s tax liabilities, and paying HMRC. Therefore, Just Interims can advise our clients to ensure this process is done correctly.
What does ‘reasonable care’ mean?
Organisations must demonstrate ‘reasonable care’ when making status determination decisions. Essentially, meaning they must demonstrate that they have assessed IR35 correctly to ensure that they do not inherit IR35 liability, regardless of whether they are the “fee payer”. Through working with Just Interims and our IR35 expert partners we can guide you to ensure your IR35 assessment successfully meets HMRC “reasonable care” tests.
What does it mean to be “outside” IR35?
Contractors operating as a genuine business outside the scope of IR35, can pay themselves marginally more tax efficiently, usually through a combination of salary and dividends. In simple terms, clients pay the contractor, who will maintain responsibility for their taxes, just like any other small business owner.
What does it mean to be “inside” IR35?
Working inside IR35 means the service you provide is deemed by HMRC to reflect a service of employment, not self-employment and therefore subject to the same taxes of a permanent employee.
What if I disagree with my employment status decision?
If you do not agree with a status determination, you can appeal via a client-led disagreement process. The client has 45 days to respond. They can either change the determination and provide a new statement or stand by their original decision with an explanation.