IR35 Private Sector Tax Legislation is Changing
Are you prepared for the changes to private sector tax legislation in April 2020?
If you hire IT contractors it is likely that you will need to review the contracts you have in place with them.
Is there any other tool apart from CEST that we can use?
Yes – there are a number of tools on the market that are associated with a full IR35 review. These vary in quality and the approach. Once we have completed a RAG audit for clients, we will discuss the options and select a tool that best suits clients’ individual needs as part of the full IR35 review. CEST is the only Government-backed tool, and is the only free tool available.
Is there IR35 insurance?
Yes. Generally, insurance is only available for the fee payer, though this can be extended to the hirer. It should be noted, though, that insurance providers will set out requirements for the compliance process that should be followed, and any failure to adhere to this will render insurance invalid.
What's The REC’s take on this?
The REC is a confederation – a voluntary group of agencies join who set out a code of conduct. The Employment Agencies Inspectorate is responsible for enforcing the rules for recruitment agencies, but there are no standards for agencies with regard to IR35. The agency is responsible for implementing the client decision in terms of the status, but each agency will determine the right approach for them and their clients.
Working practices and arrangements - can you explain what they refer to? Can you give some examples?
Working practices and arrangements generally refer to things that happen in practice rather than in theory. So, for example, your contract may say the contractor determines the way in which work is delivered. But, if you set out a work schedule with control over what, when and how work is delivered, then the working arrangements or practices would ‘trump’ the contract.
What does it mean by 'having appropriate experience'? What experience?
This means appropriate experience in terms of determining IR35 status. That could be experience of making assessments, a comprehensive understanding of the law, etc. It’s essentially the Government’s way of saying you must be competent to determine the IR35 status – which will be quite a high bar for most businesses.
How does it impact those who are a limited company and are taken on through an agency or umbrella company?
If an engagement is found to be inside IR35 and the individual works via a PAYE solution, the impact is approximately 15 – 20% increase in costs.
Are there any special considerations for clients that use an RPO or MSP provider?
Clients should give consideration to how they might fulfil obligations around communicating status decisions and having an appeal process. Clients will be responsible for ensuring the decision reaches the worker.
What do you think a robust appeal process might look like?
I would suggest something that is transparent, efficient and has a degree of independence, i.e. don’t rinse and repeat the same information through the same online test. We can support clients in implementing an appeal process as part of our review.
For more information about IR35 or to discuss how Evolution can help you prepare for April 2020, please contact