01785 243276 admin@howardsca.co.uk

IR35 and employment status continues to be a hot topic. The rules apply to large and medium-sized organisations. In April 2021 they joined public bodies in being responsible for determining their contractors’ employment status. Increasingly, HM Revenue & Customs (HMRC) is getting tough on compliance.

 

Enforcing the rules

Despite the pandemic HMRC is busy enforcing the rules. Even government departments aren’t immune. This year HMRC investigated, reclaimed duties, and charged considerable penalties. It singled out the Home Office, Department for Work and Pensions and HM Courts and Tribunal Service. Due to their IR35 failings alone, HMRC recovered more than £125 million.

 

IR35 and employment status

Establishing the correct status can be complicated. It’s vital to take into account individual client-related factors. These include working practices and contractual terms and conditions. Also consider a contractor’s potential work circumstances.

 

Useful tool

Essentially, organisations should notify contractors. Provide them with a copy of the relevant employment status. Fortunately, HMRC offers guidance. It’s ‘The check employment status for tax (CEST)’ tool is very useful. It helps ensure that a worker’s employment status is correct.

 

Call the helpline

Sometimes, the CEST tool can’t determine IR35 and employment status. In such instances, check with the worker. Find out if the information used is correct. Alternatively, contact HMRC for assistance. Call the Employment Status and Intermediaries helpline on 0300 123 2326.

 

Get the determination right

HMRC commits to honouring the determination result. Fundamentally, it must be based on accurate information. Information that applies to the entire contract period.   

 

Take action on IR35 and employment status

So, what can large and medium-sized organisations do? We recommend taking the following action:

 

  • Keep all copies of determinations
  • Keep evidence of all answers to questions in the determination
  • Are there changes to the contract or the terms and conditions? If so, make a new determination.
  • Obtain a worker’s/contractor’s agreement to the employment status. It’s not mandatory, but it helps.
  • Put a status disagreement process in place. This will help you to deal with any contractor/worker appeals. Find out more in HMRC’s Employment Status Manual.

 

Be clear about ‘small’ organisations

Are you contracting services to a small non-public organisation? As a contractor, you’re responsible for following the rules. To do so, secure written confirmation that the client satisfies the small category.

 

We can help

Need advice on IR35 and employment status? Concerned about its correct implementation? Contact our team on 01785 243276.