So here it is folks – in 1 months' time, on April 6th, 2021, the government extends its Off Payroll working rules to the private sector...
I’m sure anyone who has historically run contractors will know exactly what’s going on and has taken any action needed but it seems like a perfect time to refresh the memory of anyone thinking of utilising contractors for the first time from April:
- Off-payroll rules apply where an individual provides services through an intermediary (their personal service company) to a client. The responsibility for determining the workers IR35 status sits with the client and can be made using the governments CEST tool or one of the other tools available, mainly via accounting companies that specialise in managing contractors. The determination will confirm whether the contractor sits outside IR35 (and can use their PSC) or inside (PAYE or Umbrella). The determination relates to the specific contract vacancy and not the contractor so determination should be made before the contract is even advertised or released to recruiters.
- You may be exempt from making the determination if your company meets two of the following criteria related to being a small company:
Your turnover is £10.2 million or less
You have£5.1 million or less on the balance sheet
You have 50 or fewer employees
In these circumstances IR35 determination sits with the PSC and not the client
CEST (Check Employment Status for Tax) is an online tool designed by HMRC for the purpose of helping public authorities decide if an individual falls inside or outside IR35 guidelines based on whether they are deemed employed or self-employed.
Although the introduction of this tool has been seen to be useful, unfortunately, as demonstrated by this tribunal case for Kaye Adams, CEST is not always accurate and fit for purpose. The Kaye Adams case also tells us that during this period of adjustment to the inside/outside IR35 world of contracting, cases like these allow us to see how IR35 will operate in the real world and what we can expect from the introduction of new guidelines such as this.
Ultimately, the whilst the CEST tool is not 100% accurate and needs improvement, it’s simply the best tool available at the moment to allow us to make inside or outside IR35 decisions.
Although many of our contractors will flex how they work to suit the project some of our contractors will still only work on projects where the client has determined the role sits outside the scope so its key that anyone hiring contractors know how the assessment tools work……
It can be confusing so if you need help please shout and we can help you navigate the process either directly or with the help of one of expert accountancy partners.
Happy contracting in 2021 everyone!