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Bright Purple - Global Recruiters

Off Payroll Regulations (IR35) - A View of What Changes and What to Do Next

This is our view of what can been reasonably seen as happening in respect of the 6 April 2020 legislation changes. This is largely taken from communications from APSCo, RSM and various Payroll providers.

 

It serves as an outline and not a definitive guide. We will continue to provide updates and communications on process and best practice as information is available. Bright Purple are working with our partners to stay in touch and prepare to provide solutions to our candidates and clients that meet the legislation and need for business continuity. 

Changes

 

Determining what is inside or outside IR35

 

Best understanding of factors that influence a role being inside or outside IR35

There are more than status tests and some are considered to have differing significance by various parties, however they include:

- A genuine right of substitution

- In most cases where professional services are provided, it is important that a contractor can demonstrate a certain amount of autonomy in the way they undertake a project
- Indicating that the contractor will be supervised
- Including any “staff” benefits (including holiday or sick pay)
- Including start/end/break times
- Contractual clauses that specify any rights of control or supervision over the contractor

- Contractors taking financial risk would be expected to maintain appropriate insurances

- In essence, it is an obligation between the parties to provide and accept work. In an employer/employee relationship, mutuality of obligations is easy to establish.

 

Reasonable Care When Determining what is inside or outside IR35

There are three instances whereby the client becomes the “fee-payer” and therefore carries the tax liability:

We expect to get more guidance from HMRC on what reasonable care is.

* The draft legislation imposes an obligation on the client to provide a “client-led disagreement process”. The client must respond to a request to review the status determination statement within 45 days. The client must either confirm the determination is correct, with reasons, or provide a new status determination statement reaching a different conclusion and withdraw the previous one.

Although you carry the responsibility for making the status determination, the recruitment business will carry the tax liability. Therefore, it is to be expected that recruitment businesses may challenge status determination statements that they do not agree with.

 

Roles Inside IR35

Where a role is deemed inside IR35 Bright Purple will point to 2 options as an alternative to off-payroll working:

There are various outcomes of how the cost will be managed and who bears them, our team will work with you on this.

 

What to Do Now and Next

We are still awaiting clarity on a number of issues surrounding IR35 but we take this steps and questions as sound advice based on what we know just now.

 

Clients

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