IR35 For Clients
Reforms to IR35 legislation, came into force in April 2017 for the public sector and were extended to the private sector in April 2021. This means that the responsibility for determining the tax status of all personal service company (PSC) interim workers has been passed to the hiring organisation, including potential liability for tax and national insurance contributions.
IR35 exists to address the relationship between the end hirer and the contractor to understand if it is an employment relationship or not, therefore all assignments now need to be assessed to understand if they fall in or outside IR35.
If a contract is found to fall inside IR35 then the contractor is expected to pay the same amount of tax and NI that a permanent employee would pay.
Similarly, the end hirer is expected to pay the matching NI and both parties are held accountable if the funds aren’t paid correctly.
When a contract assignment is assessed as inside IR35 there are 3 different ways a candidate can now engage:
PAYE – all statutory deductions for PAYE tax, NI and pensions are deducted at source. Holiday pay is accrued and paid when you are on holiday. Auto enrolment onto a pension scheme (can opt out).
Umbrella Company – there is a contract with an Umbrella company that manage all statutory deductions. Vantage pay the Umbrella company and they are responsible for paying the contractor. The decision on holiday pay accruals is down to the contractor. There will be a small weekly fee charged by the Umbrella company. Contractors chose Umbrella companies to simplify continuity of earnings for their own financial planning ie mortgages / pension provision.
Deemed Ltd - the contractor operates through their Ltd company but the liability shifts to Vantage as the deemed employer and therefore the gross rate is reduced to account for Employers NI. Holiday pay is included into the gross rate and not accrued. Contractors are not auto enrolled onto a pension. Vantage deduct PAYE tax and Employee NI. Corporation Tax and tax on dividends may still apply.
If a contract assignment is deemed to be outside IR35 then the contractor is considered to be a genuine contractor and not a disguised employee. This means the hiring organisation and HMRC consider the contractor to be self-employed and the contractor must pay the right amount of tax and NI for the money they receive for their work.
Vantage Recruitment Solutions have partnered with Kingsbridge to provide an award winning comprehensive IR35 solution that manages the entire process, from status assessment to process consultation, so that if an assignment is deemed to be outside IR35, our end hirers can confidently and compliantly maintain their flexible workforce outside IR35.
WHAT CAN THE KINGSBRIDGE IR35 STATUS TOOL DO FOR YOU?
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
HOW DOES THE KINGSBRIDGE IR35 STATUS TOOL WORK?
The Kingsbridge IR35 Status Tool takes a best-of-both approach, allying a custom-designed automated process - developed by Andy Vessey ATT, ex-HMRC, tax advisor, and a leading IR35 specialist who has defended over 500 investigations, most of which he has won - with in-house expert consultancy to provide the quickest, most accurate IR35 status result available.
If it’s a clear-cut case, the tool then generates an instant determination, as well as a comprehensive report that pulls through the notable positives or negatives of a given engagement, as well as an official Status Determination Statement (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.
Kingsbridge is currently the only IR35 status provider on the market to offer a hybrid solution, and we firmly believe that it’s the best one-stop-shop to meet all your IR35 business requirements.
IR35 PROTECT OFFERS ADAPTABLE TRIBUNAL COVER FOR CONTRACTORS
If a role is found to be outside of IR35, it is important to 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 insurance protect the contractor, it's also designed to flex to cover the fee-payer and engager 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 a safe bet for the fee payer and engager.
Find out more about IR35 protect here.