Take the IR35 Risk out of Recruiting Interims with Blusource Recruitment
Recruiting interim workers can have many advantages: contract workers can bring a fresh perspective, offer flexibility, and can be a cost-effective staffing solution. But changes to the United Kingdom’s IR35 tax legislation may have left you apprehensive to recruit interims. Should your organisation determine an employee’s status incorrectly, you may be exposing your company to tax liability.
What has changed with IR35?
From April 6, 2021, contractors operating via an intermediary, such as their own limited company, will have their employment status determined by the client engaging their services. The new legislation will bring the private sector in line with the public sector, which introduced this reform in 2017.
Medium and large-sized public sector clients will be responsible for determining the status of all contract or off-payroll workers who operate through their own intermediary, including if the worker is provided through an agency. The responsibility for determining a worker’s status has shifted from the contractor to the client — except for workers providing services to a small client in the private sector where the worker’s intermediary will remain responsible for deciding employment status.
Determine employee status carefully
To make sure you are upholding the IR35 legislation, your organisation should communicate the status of each employee with a Status Determination Statement (SDS). This should include your conclusion about the worker’s employment status and the reasons for that determination. The SDS needs to be passed on to the employer or organisation you contract with. Your organisation is also responsible for keeping detailed records of each determination and should have processes in place to deal with any disagreements that may arise over a decision. The rules apply on a contract-by-contract basis, meaning a worker could have some contracts with your organisation that fall within the off-payroll working rules and some that do not.
Businesses need to take care when determining the status of an employee as failure to do so will leave your company responsible for the worker’s income tax and national insurance payments. Her Majesty’s Revenue and Customs (HMRC) can question any person they suspect may not have upheld the legislation and, should they be found to be in breach of the laws, seek to recoup the applicable tax, National Insurance contributions, and apprenticeship levy.
Recruit interims with peace of mind
If you are concerned about determining the status of your interim recruits, get in touch with Blusource Recruitment. We have the ability to accurately determine the correct status of interim recruits. For interim recruits found to be a contract or off-payroll worker, Blusource Recruitment can insure these placements for tax liability up to £100,000.
Should your employees be checked by HMRC and found to not be complying with IR35, your company would be protected by this insurance. Our processes are automated in a portal which can be accessed by both the contractor and the client during the process, and includes employment status testing and the subsequent insurance on the placement.