Off Payroll Working in the UK

What does IR35 mean for your organisation?

IR35 In the Public Sector

Since April 2017, the IR35 status of contractors working in the Public Sector has been determined by the client and not the contractor.

As clients are liable if they make the wrong determination, many Public Sector bodies have taken a cautious, risk-averse approach and have decided that their contractors are covered by IR35.

If the client decides that IR35 applies, the contractor's limited company (Personal Service Company) will be taxed at source in a way similar to the worker being an employee. Account must also be taken of Employers National Insurance contributions.

Despite the contractor being treated as an employee for taxation purposes, this does not change the employment status, i.e. they do not receive the rights and benefits of employment.

HMRC has provided an online tool, Check Employment Status for Tax (CEST), to determine if a worker on a specific engagement, should be classed as employed or self-employed for tax purposes.

HMRC have stated that they will stand by the result given unless a compliance check finds the information provided isn’t accurate. However contrived arrangements to avoid IR35 may be considered deliberate non-compliance and may, therefore, lead to penalties.

The government believes that the implementation in the Public Sector has been successful and has therefore decided to extend the legislation to cover the Private Sector.

Skillbase Group combines both global reach and management know-how for specialist, workforce management solutions.

IR35 in the Private Sector

In the Autumn of 2018, it was announced by the Chancellor that April 2020 would see the Off Payroll Working extended to the Private Sector. The Chancellor said that the rules will only apply to medium and large sized companies, however, the definition of these terms has not yet been made clear.

These changes are likely to result in an increase in costs to Private Sector organisations.

How can Skillbase help?

Skillbase Group are experts in the outsourced management of Contingency Workforces both in the UK and globally. With many years of experience handling compliance and payroll of workers, we are ready and able to manage and process your workers.