IR35 - some insights

The extension of IR35 legislation from 6th April 2020 will move the responsibility for IR35 status determination from the contractor providing the services to the end customer. This change will only affect medium and large private sector customers as small companies are set to be exempt and the old rules will apply.

Our commitment is to guide and facilitate compliant solutions to both our customers and to the contractors we work with to ensure that all parties remain wholly compliant and abide by the ramifications of the changes and ensure that we can continue to support our customers' requirements by securing the best possible talent available.

Understanding the changes to the legislation must be a priority for everyone in the supply chain and it is imperative to ease concerns which have arisen as a result of misconceptions and inaccurate rumours. We at Vine Resources are committed to providing that support.

Definitions

End customer - The end customer is where the contractor is placed and performs the work.

Fee payer - The fee payer is the agency that arranges the fee payment to the contractors.

Determination - The process of assessing a contractor's employment status by careful consideration of all the facts by the end customer.

PSL Umbrella Company - An umbrella company from within our PSL of trusted umbrella companies instructed by us to deduct statutory taxes and National Insurance before payment is made to the contractor.

Personal Service Company - A personal service company is a limited company.

A determination decision undertaken by the customer must consider the working relationship between the customer and the contractor and whether an employee/employer relationship has been created and the customer must demonstrate that reasonable care has been given to that determination.

There are key questions that will need to be considered by the customer and a checklist can be completed to assist in the determination process.

A status determination statement based on the customer's assessment must be completed for each new or extended contractor assignment. A contractor has the right to challenge the determination within 45 days and we will liaise with the customer to mediate this situation.

An inside IR35 determination will require us as the fee payer to ensure that statutory deductions are made from fee payments made to the contractor.

An outside IR35 determination will confirm that there is no employer/employee relationship. We can provide insurance against an investigation undertaken by HMRC to mitigate any risk for those in the supply chain relating to an assignment determined as outside IR35 for all parties which ensures that a blanket ban approach is not necessary.

It is important to stress that the process for determination for assignments be set up by customers to ensure that swift, accurate assessments can be made and the information is passed to us, the employment agency, as quickly as possible.

The determination can be a contributing factor to the available contractors available with the necessary skills who may be looking to work with a customer or for customers with a number of contractors already who should be considered and who may be affected by the legislative changes.

Communication of the status of an assignment and any effect on the current engagement model can then be managed with minimal disruption to customer projects or activities. A proactive approach will ensure that a customer's business is protected from risk and will assist to retain and attract new contractors.

Vine Resources can assist both existing and new customers with an audit of the current workforce with the assistance of outsourced industry professionals who are experts in their field and who have considerable experience in case law.

We can also work with our customers to provide support for projects under a Statement of Work.

We would be happy to discuss further how we can support new or existing customers with any project requirement resources and of course, to discuss clarification on IR35 legislation if required.

If you have any questions about IR35, please get in touch.