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“Calling all Contractors”

Date posted: October 30, 2017

IR35 is tax legislation that is designed to combat tax and NIC avoidance by workers supplying their services via an intermediary, usually a Ltd company, but who would be an employee if the intermediary was not used.

Detailed guidance on how IR35 works and where it is most likely to apply is available at: http://www.ts-rc.co.uk/ard/detail_doc.asp?ID=772464&AID=2355&SID=10&FID=43518

But what’s new?

A seismic shift came about in April of this year whereby the onus for deciding whether IR35 applies now firmly rests with the end client (or agency if appropriate). These new rules do however only apply to “Public Authorities” which include:-

  • Government departments and their executive agencies
  • Police and Fire Authorities
  • Schools and Universities
  • Local authorities
  • The National Health Service

The Employment Status Service (ESS) from HMRC is designed to test whether an engagement is “inside” or “outside” IR35 and it believed most public sector organisations will use the ESS to assess a contractor’s status.

But since the end client or agency are responsible for making the assessment, and more importantly liable for getting it wrong you may well understand the fear amongst contractors, that they will take an overly cautious approach choosing to apply IR35 wherever there is the slightest doubt.

And what’s next…

Philip Hammond will deliver his second budget next month and it is widely reported he will include further measures to assist bedding in these new rules. Equally well touted is the possibility of widening the definition of “Public Authorities” and/or extending it across the private sector as well!

And finally…

Riley & Co Chartered Accountants have been helping contractors ever since the IR35 legislation was introduced in 1999. Forewarned is forearmed so get in touch now. info@rileyandco.co.uk