We’re working closely with our clients and contractors to continue to provide temporary recruitment services whilst complying with the new off-payroll rules (IR35).
What are the rules?
IR35 are rules which apply where an individual works through an intermediary, such as a Personal Services Company (PSC), who provide their services to an end client. The off-payroll rules which have applied in the public sector since April 2017 are being extended to the private sector from 6 April 2021.
What is changing?
IR35 is intended to ensure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and national insurance contributions as employees.
It is important to note that the IR35 tests for whether an engagement is inside or outside IR35 remain the same. It is the responsibilities that are changing.
Under the current rules, intermediaries are responsible for assessing IR35 status and for making tax and national insurance deductions. From 6 April 2021 the responsibility for assessing IR35 status will move from the intermediary to the end client and the responsibility for making tax and national insurance deductions will move from the intermediary to the fee-payer.
For example, where we are providing temporary recruitment services to our client, then Pure will be the fee-payer however, if the client is engaging directly with the intermediary then they will be the fee-payer and have primary liability.
There will be an exemption from the change in IR35 rules for small companies. Public authorities, medium and large organisations will be in scope of the rules.
If our clients are affected, they will need to understand the IR35 rules and use reasonable care to reach an accurate IR35 status decision called a Status Determination Statement (SDS).
How can Pure help?
We have partnered with Kingsbridge to provide a comprehensive IR35 solution that manages the entire process, from status assessment to process consultation. This enables us to confidently and compliantly support our clients to help them maintain a flexible workforce outside IR35. Our 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
- Ability to request a manual review irrespective of the result produced by the tool
Our IR35 status tool has been developed by Andy Vessey, ex-HMRC tax advisor and a leading IR35 specialist who has defended over 500 investigations, most of which he has won. It takes a best-of-both approach, allying a custom-designed automated process with in-house expert consultancy to provide the quickest, most accurate IR35 status result available.
If it is a clear-cut case, the status tool will generate an instant determination and a comprehensive report that pulls through the notable positives or negatives of a given engagement, as well as an official SDS that you can supply to the contractor. If it’s a borderline result, the answers given are passed over to one of Kingsbridge’s in-house IR35 specialists for further manual review.
If a role is successfully outside IR35, you can back the assessment with IR35 insurance.
Kingsbridge offer a market leading, Zurich underwritten IR35 insurance policy that protects the whole supply chain for up to £100k legal defence costs and £100k tax liability, as well as providing a legal expenses policy.
Not only does this IR35 insurance protect the contractor in the run up to April 2021, it's also designed to flex come the reform deadline to cover the fee-payer as well. This means that the entire supply chain is protected against the potentially crippling costs of an IR35 enquiry and any tax debts found owing – peace of mind for the contractor and the client.
Find out more about IR35 protect here.
To help our contractors with preparing for this change we have created an IR35 Guide for PSCs.
To help our clients with preparing for this change we have created an IR35 Guide for Clients.
If you require any further support or wish to talk to one of our team surrounding your specific circumstances, please contact us on firstname.lastname@example.org or call 01223 209884.