WHAT IS IR35?
IR35 was introduced in 2000 to address concerns relating to individuals who supply their services via an intermediary (such as a Limited Company) instead of as an employee. Therefore, they avoid paying employee income tax and national insurance contributions.
Where an assignment is deemed ‘inside’ IR35, PAYE deductions must be made from the contractor’s pay. Any assignment ‘outside’ IR35 is classed as a genuine B2B service and is not subject to the same tax treatment as employees. Advance TRS are here to support you through these reforms.
We have partnered with IR35 experts Kingsbridge and Liquid Friday to guide our client and contractor communities through the changes in legislation. Browse our latest IR35 news, read our FAQs or get in contact with any questions you might have.
WHAT HAS CHANGED AND HOW DOES IT IMPACT ME?
From 6th April 2021, following changes in the public sector in 2017, the government extended the reform to the legislation to capture large parts of the private sector. The key change is that the responsibility of defining the IR35 status of the assignment switched from the individual’s Ltd company to the client, as the recipient of the services.
The legislation states that all companies must take ‘reasonable care’ when assessing if roles are inside or outside of IR35. Taking a ‘blanket approach’ to assess all roles won’t deliver this. We have spoken about the reasons in a recent blog article.
The potential financial penalties can be significant if incorrect steps are implemented, but there is support available to help.
WHAT DO I NEED TO DO TO ENSURE THE CORRECT DETERMINATION?
We are working with clients and contractors to ensure everyone has taken the necessary steps. We’re also ensuring they have been given the correct IR35 determination for them.
- SPEAK TO YOUR CONSULTANT – If you are concerned about whether you have taken the necessary steps and want some guidance, the best place to start is by calling your consultant. They will be able to discuss how the reforms impact you and your method of engagement.
- GET A SELF-ASSESSMENT – Next, you can use the Advance TRS free self-assessment tool to confirm your determination and which method of engagement is suitable for you going forward.
- CONFIRM YOUR METHOD OF ENGAGEMENT GOING FORWARD – Once you have completed your self-assessment you will need to confirm any changes with your client and agency to issue any new contracts/rate changes and agree your transition date.
- PURCHASE IR35 INSURANCE – To ensure you and the supply chain are protected, we recommend purchasing IR35 Protection Insurance from our partners Kingsbridge who offer a Zurich underwritten policy
THE ADVANCE TRS APPROACH – Be prepared and proactive
Due to the scale of the impact of this legislation, we were prepared well before the Reform came into effect. This ensures our compliance and working practices facilitate confident determinations.
Listen and Learn – Our ability to gather intelligence from multiple sources allows us to learn at a faster pace and deliver the most informed approach to all parties.
Openly Communicate – Face-to-face meetings and regular bulletins provide clients and contractors with the most up-to-date information on how best to set out our working practices.
Free Self-Assessments – We worked with Kingsbridge to offer free self-assessments for contracts.
An Insured Solution – We understand the importance of peace of mind, so have worked with Kingsbridge to offer a Zurich underwritten insurance product to protect the whole supply chain.
WHY ADVANCE TRS?
- Offering free self-assessments and IR35 insurance to protect the whole supply chain
- APSCO accredited engineering recruitment consultancy with sector specialist consultants
- ISO18001, ISO9001, ISO27001 certificated and 5* RISQS since the inception of the scheme
- Huge financial investment in contractual documentation reviews from recruitment expert solicitors
- Robust contracts and terms of business that are compliant with current government legislation
- Open book policy on working practices with contractors and clients
- Excellent legal support from expert recruitment and financial specialists
- IR35 guidance from FCSA accredited supply chain partners
- Partnered with Kingsbridge Insurance, one of the UK’s leading suppliers of PSC insurance packages
- Over 100 years collective experience of engineering recruitment
- Dedicated business services team focused on contractual compliance and payroll excellence
- A compliance-focused supply chain partner experienced in supporting all levels of project delivery
A LITTLE MORE BACKGROUND INFORMATION ON IR35
HMRC IR35 legislation has been in place since 2000, but non-compliance is widespread.
HMRC estimate that only 10% of those who should be applying the rules do so, which will cost the Exchequer £1.3 billion in 2023/24. This deprives vital public services of important funds and is unfair to taxpayers who are complying with the rules.
Whilst the compliance of PSC workers has been a relatively mute subject for the last 20 years, HMRC have now realised there is a significant need for focus and attention on the management of this area of taxation, more specifically in relation to employers’ national insurance contributions.
With such significant growth in the number of £multi-billion engineering projects across the UK, there will always be a requirement for the engagement of a highly skilled and flexible workforce that is prepared and willing to move from project to project.
It is essential that this workforce becomes more educated on and compliant with the options that are available to them if they wish to remain off-payroll for the duration of their assignments. Advance TRS Ltd. are committed to providing the highest level of service and engagement throughout the recruitment process to ensure that workers and clients can deliver their services and their projects successfully in the knowledge that their status determination truly reflects their employment status.
It is important to learn from the public sector reform and ensure that we keep contractors fully briefed on their options whilst enabling clients to make confident and informed decisions.
It is essential to approach the private sector reform through the utilisation of all information and facilities available to each member of the supply chain. This offers the flexibility to evolve with HMRC decisions whilst retaining a common goal of providing resources to deliver projects.
It is clear that the public sector ‘blanket approach’ determinations should be replaced with the recommendation that contractor IR35 status assessments are dealt with on a case-by-case basis. This approach offers an assurance to valuable workers that their interests are treated fairly, in line with the legislation and not just for the benefit or safety of the end-user.
One of the key aspects of managing the implementation and impact of the IR35 private sector reform is to ensure that each party in the supply chain recognises their responsibility, communication is clear and processes of due diligence and compliance are auditable. Contractors must take responsibility for the management of their accounts and affairs whilst engagers must extend fair treatment or ‘reasonable care’ to their contractors by preparing diligently and not leaving off-payroll working processes and considerations to the 11th hour.
We have the operational capability to adequately deal with the extra administrative burdens and will work closely with all parties to manage a case-by-case approach.