IR35 - Linear Recruitment is here to help you
Legislation was introduced by HMRC in 2000 to collect employment tax from worker’s paid via their own limited company. HMRC was asking if a worker was essentially an employee (Inside IR35) or a genuine self-employed contractor (Outside IR35).
What is changing?
- The liability of making this “in” or “out” decision, or employment status decision is currently made by the individual contractor
- IR35 Decision moved to the end user client along with any liability for unpaid taxes where a decision of Outside IR35 was made incorrectly
- Decision remains with contractor where the end client is classed as a small company as per government guidelines
What if the contractor is found to be Inside IR35?
- Any payments made to the PSC are be subject to PAYE/NIC and the PSC must pay the correct amount of tax and national insurance (NI) that an employee would have been deducted
- The fee-payer or employer must also pay employers national insurance. All deductions must be made at source.
- Where an outside decision is successfully challenged by HMRC as inside, penalties will be charged to cover the unpaid tax and NI
If the individual is deemed outside IR35 then this means they are operating correctly as a limited company and the contractor is responsible for all tax liabilities due.
IR35 in Practice – Status Determination Statement (SDS)
- End client will be asked to produce a Status Determination Statement (SDS) which will be the result of an assessment, and in producing the completed document must be seen to take “reasonable care”, fully considered, and explained
- SDS passed down the supply chain, to the fee-payer or agency and the contractor. This will form the basis for the “in” or “out” decision which will be applied to the contractor’s payments
IR35 – Linear is here to help you
The time is now fast approaching so we are readying ourselves once more for the changes by forging partnerships with IR35 experts Kingsbridge and Qdos.
Linear will work with clients to follow their methods of dealing with the legislation and respect any decisions made. Our goal however, is to assist and guide both candidates and clients through the changes with minimum fuss and disruption.
We would advise caution to clients thinking of issuing blanket bans on PSC workers - we believe we have the tools to help you avoid this route
We have two solutions which will both:
- Provide IR35 status decisions backed by experienced experts in the field
- Give access to the best talent
- Allow for continuation of projects without disruption
- Provide peace of mind of a compliant workforce
- Remove the risk and worry of a tax liability which could exist without such thorough assessments
- Provide insurance options and cover for the IR35 decisions
This way we can give contractors every chance of keeping their current “outside” status and giving ourselves and our clients piece of mind and assistance in arriving at this decision. So, what are these solutions?
Solution One - Linear IR35 Assessment Tool
We have partnered with Kingsbridge to provide an award winning comprehensive IR35 solution that manages the entire process, from status assessment to process consultation, so you can confidently and compliantly maintain your flexible workforce outside IR35. Kingsbridge is currently the only IR35 status provider on the market to offer a hybrid solution, and we firmly believe that it’s the best one-stop-shop to meet all your IR35 business requirements.
The portal will allow us to:
- provide unlimited IR35 Assessments and Role Reviews at no cost to the contractor or client regardless of the result of the status decision.
- provide a clear decision on the contractor’s status using the tool with full input on this from both client and contractor
- in some cases, advertise specific roles as being outside IR35 which could increase the pool of high-quality workers who could be recruited for the role
Here is a summary of the key benefits of the tool. The question set was designed by Andy Vessey, ex-HMRC, tax advisor, based on his case law experience - he is one of the foremost IR35 experts in the country.
- Free role-based assessments
- Individual assessments (including SDS)
- Expert review of borderline results
- Downloadable reports and recommendations
- Integrated status disagreement process
- Access to IR35 Protect Insurance
- Assistance from Linear Recruitment who has unlimited access to an IR35 Helpline
- Regular tax and legal updates
- Annual review and risk assessment
Solution Two - Qdos Assessment Tool
In partnership with tax and insurance specialists Qdos we can use their online portal for managing IR35 reform.
The key benefits are:
- IR35 Assessments reviewed by experienced IR35 consultants
- Online Management Tool ensuring information sharing obligations are fulfilled and visibility for all parties in the chain
- Role Assessments feature for advertising new roles
- Tax Liability Cover to insure against the risk of outside determinations
This simple flowchart shows how it works:
Assessments through Qdos will cost the contractor £89 + VAT regardless of the result. So the fee will still be charged to reach an Inside IR35, however tax liability and legal insurance cover is provided within the cost.
Our solutions are not the only options out there, but we feel these provide us and our clients and contractors with peace of mind that we will be able to continue to supply workers through PSCs and remain compliant. They will also allow us to produce a Status Determination Statement (SDS) that is fully reasoned and considered. Without this SDS we will not process the contractor’s pay!
If you have any general queries regarding IR35 please forward them to firstname.lastname@example.org and we will do our best to assist.