Are you IR35 compliant?
The IR35 off-payroll working rules have now been rolled out to the private sector as of 6 April 2021, having previously been confined to the public sector from April 2017.
Their introduction means many businesses will now have to undertake a review of their working practices with contractors and assess whether these rules may apply to them, and if they do, what the impact of that is.
Determination of status
Under the off-payroll working rules, where medium and large UK businesses (end users) engage contractors to perform services through the contractor’s own personal service company, or another intermediary such as a partnership, the end users are obliged to determine whether there is “deemed employment” between them and the individual contractors. Whether or not there is deemed employment will impact upon where tax liability lies and involves looking at a number of factors often associated with employment status. This can be a particularly complex balancing exercise of all the relevant factors, and there is no hard and fast rule that can be applied. Each case will turn on its own facts.
Once this determination has been made, it should be confirmed in writing to the rest of the supply chain via a status determination statement (“SDS”). If that is the case, then whoever in the supply chain pays the contractor, which could be the end-user or another entity such as an agency, will have to account for tax and NI in relation to those payments.
Failure to comply
Given the possible financial implications of a failure to comply with the rules at any part of the supply chain, it is important for businesses to ensure they are compliant and keep these arrangements under regular review. Any new contractors who are engaged should also not just be treated as the same as those who have come before. Applying such a blanket policy in these decisions is not permitted under the rules.
How can we help?
Now the rules are in place businesses should be undertaking a determination for any affected arrangements and applying the rules to any payments made. Should you require any advice in this regard Tom Martin, one our employment law experts, can provide a fixed fee quote to: -
- Review or produce a contractor agreement between a contractor and end-user;
- Provide an assessment on whether any arrangements you have in place satisfy the criteria of deemed employment;
- Review or produce any policies/procedures or SDS template documents.
We’re here: If you’d like more information or are interested in obtaining a no obligation fixed fee quote, please contact Tom on 01522 515 007 or email firstname.lastname@example.org