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The IR35 reform in the private sector will be implemented on the 6th of April 2021, and it is crucial that businesses are ready for the changes. Both end clients and contractors must have a thorough understanding of IR35 and whether they are inside or outside the legislation.
In our recent webinar, Kyra Cordrey, Commercial Director at PageGroup was joined by and IR35 expert to discuss the ins and outs of IR35. You can watch the on-demand webinar here. Our engaged audience submitted a number of questions to the speakers, and here are five that everyone needs to know the answers to.
The size of the overall group defines the size of the end client in terms of the IR35 reform and therefore in the example above, you would need to establish if the role was inside or outside IR35 assuming that one of the other two tests were also met.
Also, if the company is part of a group, you need to consider the group.
If the client or hirer is based in the UK and has a UK entity, then the worker would be subject to the IR35 reforms.
No. It will depend on the circumstances, but broadly speaking, if the overseas PSC is providing services in the UK you will need to consider status.
It is best practice to carry out an indicative assessment of the role before the contractor is placed, this would then give clarity to the recruiter as to whether they were looking for candidates inside IR35 (PAYE or Umbrella) or outside IR35 (limited company / personal service company contractors).
When we place limited company contractors at PageGroup, we have a dedicated temp services team who would check the limited company details to ensure strong governance and compliance. We are also asking our contractors working through limited companies to hold insurance to protect them against personal indemnity and IR35 (which would protect everyone in the supply chain should HMRC investigate).
If you have determined that the role is inside, then it is up to the agency to ensure they are deducting the relevant taxes of that worker. Although it is the responsibility of the end client to determine the status, as long as reasonable care has been exercised, it is the responsibility of the agency (and the liability falls to them) to deduct the relevant taxes. HMRC expect you to keep records to demonstrate that you have told the agency. Do not forget that you need to let the worker’s PSC know your decision.
Recent guidelines from HMRC have indicated that they will now accept a printed, dated copy of the response and reason from the CEST tool as a valid SDS. They are also clear that there needs to be evidence that the contractor’s contractual working arrangements are mirrored in practice and therefore completing the CEST tool is only part of it.