IR35 for Contractors


Specialist IR35 Accountants

IR35 for Contractors

The new set of IR35 rules known as ‘off-payroll’ working affect contractors working in the public sector. These rules do not affect contractors working in the private sector though. This guide will explain how the new rules work.

‘New’ IR35 Rules

  • The New IR35 or ‘off-payroll’ rules apply to contractors providing services to the public sector through an intermediary/PSC
  • Contractors who provide services directly to the public sector are now ‘employees’ and their NICs and PAYE are paid by the public body hiring them
  • To determine whether contractors fall within the new ‘off-payroll’ rules will be decided by the public body that hires the contractor directly or through an intermediary/PSC
  • This is not determined by the intermediary or the PSC
  • The public body or agency known as the ‘fee payer’ is now responsible for paying PAYE and National Insurance contributions (NICs) for the contractor
  • The ‘fee payer’ is treated as an employer of the contractor for NICs and tax purposes

Date that new rules will apply

The new rules will apply to payments made by the ‘fee payer’ (public authority or agency) on or after 6 April 2017. Contracts that are operational on or after this date (6 April 2017) will have to abide by these new rules.

How contractors can protect themselves

Contractors that work in the public sector through intermediaries or PSCs should consider their current contracts to prepare for these new rules. New contracts that take the new IR35 rules into account should be drawn up as soon as possible. These new contracts should be applicable from April 6th 2017.

Reasons for ‘New’ IR35 Rules

HMRC wants to ensure that all contractors will pay employment taxes and NICs which was been side-stepped through working for PSCs. The 5% allowance for ‘off-payroll’ administration costs will be removed to simplify administration.

The rules affect certain contractors

The New IR35 ‘off-payroll’ rules affect contractors working for the public sector through a personal service company (PSC). It also affects public bodies, agencies and partnerships who act as an intermediary for contractors.

The rules that do not affect Agencies

The new ‘off-payroll’ rules do not apply if:
  • An agency hires a contractor out for work as if they were their employee and pays their PAYE and NICs
  • Hires them as a self-employed contractor

The IR35 Digital Tool to determine a Contractor’s Employment Status

This new digital tool should be available before the 6th April 2017.
  • It will aid the ‘fee payer’ to decide if the new IR35 rules apply to the contractor they hire
  • An employment status test will determine if a contractor is an employee of the ‘fee payer’
  • If the ‘fee payer’ pays a PSC/intermediary, then they must provide an employment status test
  • The test will determine if the contractor, hired by the intermediary, could be an employee if no intermediary/PSC existed
  • If the test shows that they would be classified as an employee, then the new IR35 rules apply

Risk of HMRC IR35 Investigation under New Rules

Those at risk of investigation are contractors who work for a PSC and whose contracts will still be in effect on or after April 6th 2017. The reason for this is that a public sector body must apply the new ‘off-payroll’ rules for payments made on or after April 6th 2017 even if the contract was entered into before this date. HMRC may very well open an IR35 investigation if public sector bodies apply the new rules to those who were once outside IR35 rules.

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LONDON ACCOUNTANTS

We have offices all over the London area, including Covent Garden, which gives you a central accountancy hub in London’s famous West End district. As a London accountants, we offer professional accountancy services to clients all over the nation’s capital and the surrounding areas, working with a range of businesses, sole traders, startups, landlords, and contractors in order to streamline their tax liability and bookkeeping procedures.

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Our East London accountants firm gives those in East London access to some of the finest accountants around. Our accountants in Canary Wharf is right in the heart of London’s financial district, making it an ideal home for our accountancy firm. We work with clients of all shapes and sizes, including small-to-medium-sized businesses, startups, landlords, and contractors. Our professional East London accountants pride themselves on their expertise and work ethic, providing you with stellar customer service every time.

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Pearl Accountants has offices all over London, with one of our most prominent offices being located in Hounslow, West London. We are experienced accountants in Hounslow, acting as business growth accountants for the majority of our clients due to our ability to scale businesses and help to drive their growth. We are dedicated to serving companies of varying sizes, from individual sole traders to small and medium-sized businesses across the UK.

Quest House, Ground Floor, 125-135 Staines Road, Hounslow TW3 3JB

KINGSTON ACCOUNTANTS

We have over 30 years of accounting experience in the Kingston area, using our eclectic combination of traditional accounting processes and innovative accounting software in order to bring our customers the very best in accounting and customer service. We act as business advisory accountants, providing our customers with consultations that advise them on the best ways to grow their business while keeping their accounts and tax liabilities in order. Our accountants in Kingston upon Thames are dedicated to helping you exceed with your business.

Causeway House, 13 The Causeway, Teddington, Kingston TW11 0JR

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We are one of the most prominent accountancy firms in London, with offices all over London. As a result, one of our offices is based in Harrow, and is located around the Park Royal area. Pearl Accountants has over 30 years of experience as Harrow accountants, serving our clients and helping them to succeed in their personal and professional lives.

Suite 618, Crown House, North Circular Road, Park Royal, NW10 7PN

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Our accountants in Staines are here to serve you, with our 30 years of experience in providing bespoke accountancy services for landlords, businesses, contractors, startups, and much more. Here at Pearl Accountants, we specialise as business advisory and business growth accountants, meaning that we have the accountancy knowledge, expertise, and experience to provide commercial consultations and advise you on how to grow your business whilst minimizing your tax bills simultaneously.

Rourke House Watermans Business Park The Causeway Staines TW18 3BA

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