IR35 Advice

from IR35 expert contractor accountants

IR35 is a challenging piece of legislation for contractors and employers alike, and at some point it’s likely you’ll need to seek IR35 advice. Our IR35 advisors are all chartered accountants with plenty of experience in providing sound advice about IR35.

Warr & Co we have an understanding of what falls inside and outside the scope of IR35, let us advise of the way forward and what action you need to take to ensure you comply with the government’s regulations in this area.

If you’re looking for help with IR35, contact us now for a free initial, no-obligation consultation so that we can discuss your IR35 status.

Recent IR35 Changes

The rules designed to tackle the issue of “disguised employment” among contractors have changed dramatically since its first introduction in April 2000. In April 2017, new IR35 legislation was introduced to help prevent those contractors working in the public sector who would, but for their use of a PSC be employees – in terms of benefiting from paying corporate rather than employed tax rates.

The government decided to change the way IR35 status is determined, leaving the decision of an individual’s IR35 status with the engaging organisation. Previously the contractor would determine their own IR35 status and be responsible for making the correct decision.

This IR35 reform was rolled out to public sector contractors to begin with, and now due to the COVID-19 crisis implementation into the private sector has been delayed until April 2021, despite many teething issues which still exist to this day.

Some public sector organisations have been accused of blanket labelling all contractors as within IR35 without accounting for each contractor’s particular working situation. PSC’s currently have very little power should they believe the wrong IR35 status has been applied, but we would encourage contractors to discuss their proposed IR35 status with engaging organisation as soon as possible; especially those looking at starting a new contract with a public sector body.

Changes are still taking place, and in the Autumn Budget in 2018 it was announced that new IR35 rules, similar to those brought into the public sector in 2018, would be introduced to the private sector. Contractors need to be ready for the consequences of the changes in the IR35 legislation which will come into force in April 2021 after a 12 month dellay due to the COVID-19 pandemic.

Challenging Your IR35 Status

Most contractors will prefer to work outside IR35 for the not just to benefit from the tax rates available to businesses, but also to ensure they don’t lose out on money which needs to go towards their pension or the running of their PSC. The most likely disputes will arise when the engaging company incorrectly determines that the contractor is inside IR35 – sometimes meaning the contractor is significantly worse off than a regular employee.

From 2020 a process to help correct this has been proposed, but is still in consultation. The proposed process would see contractors challenging their IR35 status with the engaging company, who would have 45 days in which to respond defending their status decision. This proposal has received heavy criticism because at the end of the process, correct or incorrect, the engaging company has the final say and there is no further complaint procedure which would see an external expert ruling on the contested decision.

For many contractors, IR35 status of a contract will now become a key factor in their decision to work with a company, and we would encourage contractors to confirm the IR35 status of a contract before signing. The following points can help you to determine whether your contract should be inside or outside IR35, and may help your potential employer to make the correct determination before you sign your contract.

Inside IR35Outside IR35
Are you paid on the basis of time spent?NoYes
Are you given set hours to work?YesNo
Are you allowed to supply a substitute to do your work if ill or on holiday?NoYes
Do you attend staff parties or meetings?YesNo
Is the engaging company telling you how to carry out the work?YesNo
Do you supply your own equipment?NoYes

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Are PCSs A Thing Of The Past?

Unfortunately, many large companies have decided to bypass IR35 altogether. They do this by refusing to engage with PSC’s and insisting that contractors provide their services on a PAYE basis often through an umbrella company.

Your accountant at Warr & Co will be happy to help check the contract that you have with the engaging company, and advise on any factors that could bring you within the scope of IR35.

Contact Us For IR35 Advice Now