As the recruitment and supply industry has evolved, so have the tax rules.
On the face of it, tax rules for agencies, contractors and workers should be fairly straightforward. All the tax rules are generally based on the employment status of an individual as regards the work being undertaken. Liability for tax then follows as determined by the legislation, usually ITEPA. Unfortunately, the reality of making a status determination is often far from simple.
Since 1975 recruitment agencies have generally been required to pay employment tax and NICs on payments made to individual agency workers. IR35 has been around since year 2000, and since 6th April 2017 new rules (Chapter 10 “IR35”) have applied to recruitment businesses that supply contractors to public authorities. Other rules apply to ‘false self employment’ and various freelancer and contractor payroll models, and HMRC is set upon its campaign to tackle tax avoidance.
Following an announcement in November 2018 the Chapter 10 “IR35” rules, applicable to the public sector, are due to be extended to the private sector (excluding small businesses) in April 2020, making this a key area of interest for all hirers and recruitment businesses using contractors. To discuss some of the issues and options available Lawspeed will presenting an IR35 seminar in January 2019, and if you’d like to know more about IR35 please let us know.
Whether relating to PAYE or IR35 the tax rules are complex. The consequence is that, whether or not direct liability for unpaid levels of tax is imposed on businesses or their directors, a plethora of risks is in play ready to catch the unwary.
Lawspeed offers expert support in this area. Employment status for both tax and actual employment purposes is central to all our work, factoring directly into our all our products, including Lawspeed recruitment contracts and terms of business, which comprehensively address PAYE, IR35, umbrella, consultancy and other model arrangements.
For recruitment agencies, hirers and contractors we also offer IR35 contract terms reviews as well as representation and advice in the event of an HMRC investigation. Our independent SPA accreditation is open to umbrella companies and service providers, and helps both agencies and hirers assess relevant risk; necessary to make informed decisions and recommendations, whilst at the same time showcasing the provider’s compliance credentials.
Please contact us with your enquiry. 01273 236236