IR35

IR35 is HMRC tax legislation designed to prevent LTD (PSC/Intermediary) company contractors operating as self-employed contractors simply to avoid paying National Insurance and Employee level tax. This applies where the worker would be treated as an employee if they were not working through the intermediary.

www.gov.uk/guidance/understanding-off-payroll-working-ir35 

From April 6th, 2021, responsibility for determining the correct IR35 status will switch from the individual to the end client. This means that the end client must determine if PSCs are in scope or out of scope of IR35, and they will do this by issuing a Status Determination Statement or SDS. If they don’t do it or if they get it wrong, they could be liable for unpaid taxes owed by the PSCs. HMRC has the authority to investigate the tax compliance of organisations and issue fines / penalties for unpaid PAYE tax and National Insurance Contributions.

The legislation currently applies only to medium or large businesses. There are exemptions for small businesses who can demonstrate meeting two or more of the following criteria:

-> Annual turnover is no more than £10.2 million.
-> Balance sheet total is no more than £5.1 million.
-> No more than 50 employees.

Where a business meets two or more of these criteria, responsibility for determining the IR35 status of engagement remains with the PSC and the changes do not apply. As the end client will be responsible for making these determinations – whether a contractor is ‘inside’ or ‘outside’ scope – they must ensure that their business is delivering correct assessments.

For assignments starting after April 2021, end-clients will need to specify whether an assignment is inside or outside of IR35 before the work starts and we will make the status of the assignment clear to potential workers when discussing opportunities.

Fusion People have partnered with Kingsbridge Insurance to provide a free comprehensive online solution that will support our clients through the IR35 journey.

The Kingsbridge Status Tool provides:

-> Fast, efficient and accurate IR35 assessments
-> Access to real time reporting
-> IR35 specialists on-hand to assess indeterminate status result
-> Interaction with the whole supply chain, including unique circumstances
-> The ability to request a manual review irrespective of the result produced by the tool

Should you have any queries or wish to arrange a discussion / meeting please contact IR35@fusionpeople.com and a member of our team will contact you.