You will be responsible for determining the IR35 status of all temporary/contract roles, taking “reasonable care” (i.e. using a credible assessment tool) and ensure that appropriate taxes are deducted at source.
If a worker is already subject to PAYE, IR35 does not apply.
You will have to show that you have taken “REASONABLE CARE” i.e. use a credible assessment methodology. TXM Group / Provide Consulting offer a credible assessment tool that has been audited by our legal experts.
Appropriate taxes i.e. income tax and employee NIC must be deducted at source before paying the contractor if the role falls inside IR35. These are deducted by your agency if there is one or you, if there’s no agency involved.
Your business could be held liable for tax payments and penalties if you fail to determine role status or if you get the assessment wrong.
IR35 Assessment Tool
You have to consider the consequences of making sweeping decisions. This could lead to increased costs or loss of vital resource.
This isn’t necessarily the answer. Firstly, you employ contractors for specific business reasons. Those reasons still exist. You will still need contractors and you will need to ensure appropriate engagement and pay. Work with them, there is huge benefit in keeping your contractor base informed and engaged.
This isn’t necessarily the answer. Firstly, you have to consider the costs to the business and secondly, contractors might not want to be permanently employed.
If your contractors are direct, you will need to ensure that your payroll function correctly deducts appropriate taxes at source. If they are paid through an agency, you will need to inform the agency of the IR35 determination and be comfortable that they are deducting the appropriate taxes at source. For peace of mind, you may request evidence or conduct regular audits. Your business could be held liable for tax payments and penalties if deductions are not made or are made incorrectly.
Once you have assessed your workforce you will need to decide how you treat each contractor if they fall inside IR35. You will also need to liaise with each contractor to ascertain their preferences. For critical resource you may decide to adjust the payrate appropriately. Inside IR35 contractors will have 3 payroll options: Deemed PAYE Direct Payment, Agency Payroll PAYE, Umbrella Company PAYE.
Contractors are naturally worried. Research shows that 91% of contractors do not understand the changes and 72% believe their status will not change after April 2021. We have a full contractor care programme in place to help support them.
Many companies may well feel this. Understanding and administering the changes will take time, resource, could add risk to your business and may cost money. Outsourcing this critical business need to a credible, well-prepared partner should mitigate risks and add value during this period of change.