If you’re currently contracting or looking at becoming a contractor in the UK, then IR35 is one of the most important pieces of legislation you will come across. IR35 has been around since 2000 and has gone through a few changes, with one major change happening in 2017, and another in April 2021.
We've had many years in the industry, and have seen contractors and businesses working against each other when it comes to legislative change. We believe it is critical that we all work collaboratively in order to get the correct outcome, together.
Instead of blanket bans and automated/generic answers based on yes/no algorithms, we have combined 20+ years of heritage through our Legal practice with cutting-edge technology to deliver a solution that sees all parties working together to get the best outcome for everyone involved. Our support doesn't just provide a review, our employment law experts advise on the things a computer algorithm can't, such as changes to working practices and contracts, ensuring contractors and hirers are given the support they need to get the process right.
IR35 is a piece of tax legislation stating that disguised employees will be taxed as an employed earner, rather than a self-employed contractor. A disguised employee is someone who works in a similar way to a full-time employee, but bill for their services via their Limited Company.
IR35 is used by HMRC to work out whether a contractor should be taxed as an employee according to PAYE rules, or on a limited company basis, withdrawing funds primarily as dividends. A contractor’s IR35 status therefore determines which one applies to them.
Well, IR35 itself hasn't changed but the major change that was introduced in the Public Sector back in 2017 has now been rolled out in the Private Sector. From April 2021, Private Sector hirers are responsible for assessing a contractor’s IR35 status. This responsibility previously sat with the Contractor.
An SDS or status determination statement, is a document that summarises an end hirers IR35 assessment for a specific contractor. It determines whether they fall inside or outside IR35, and therefore how they will be paid and taxed.
Yes. All contractors are entitled to challenge an end hirers IR35 Status determination. To do this, they need to undertake an independent review and put forward additional supporting evidence.
As part of the IR35 assessment process all end hirers are obliged to offer contractors a clear process for challenging end determinations. This challenge process can be initiated either by the Fee Payer or the contractor themselves. Once started, the end hirer has 45 days to inform the worker or Fee Payer whether the decision can be overturned or not. If it can they need to provide a new SDS with supporting information in that timeframe.
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HMRC have confirmed that End-Hirers do have an obligation to issue SDS’s down the supply chain and to Contractors when assessing their IR35 status.
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