IR35 is a UK-specific tax regulation that aims to ensure that contractors who work in a similar way to employees, broadly pay the same employment taxes as those employees. This regulation has been in place since 2000, but a change to the way the rules are enforced is being introduced in April 2020. This will then mean that companies that utilise the services of contractors through agencies such as Eaglecliff Recruitment will be responsible for an IR35 assessment of the tax status of contractors who come to work for them. This is a change from the current ruling which enables contractors to make this assessment for themselves directly with their Financial Advisors or Accountants.
What Will Change?
Many of the Contractors who provide their Services through Eaglecliff Recruitment will be in-scope for these reforms. Each of the clients that we work with will need to conduct an assessment that says whether the Services provided by each Contractor will fall inside or outside of the IR35 regulations. The outcome of that assessment will be passed directly to Eaglecliff Recruitment, who will then liaise with each contractor individually. If this assessment shows that the work is inside, it’s possible that the contractor will have to change the way they pay their taxes – shifting to a PAYE arrangement – and they may be required to pay some more tax.
HM Revenue & Customs has developed a method for conducting these assessments; this to help end-users of contractors’ services and contractors themselves. If the method is applied correctly, HMRC will honour that assessment.
Many of the companies that we are working with are also working with leading consultancies in order to ensure that the Tool utilised will be flexible and provide accurate results that can be relied upon.
We are confident that these Assessments will be conducted in early 2020 and new contracts will also be issued in accordance with the results of these assessments as well.
We are receiving a huge number of phone calls regarding potentially changing the End Date of an existing Assignment to the end of March 2020.
However, we are advising contractors not to do this but rather to maintain business continuity as usual and to address any contractual changes independently.
We are confident that these tools will be able to accurately determine the IR35 status of the numerous roles that contractors are providing for the companies that we work with.
If you feel that your role will be determined as being inside of IR35, it is advisable to be taking steps now to look at how this might change your pay structure.
It would be good to liaise with your Financial Advisor so that you have plenty of time to evaluate changes prior to these being implemented next year.
Contractors play an important role and these Services are hugely valued and appreciated, both by the Clients that we work with and by Eaglecliff.
Shell’s Response to IR35 Changes – What’s been happening since August?
Following our update in August, we’re sharing the latest developments in Shell’s response to IR35 changes. We understand you’re likely facing questions from contractors – we would encourage you to share this update with them.
A Reminder of Our Position
What progress has been made?
How are we preparing for assessment?
The Assessment Process
*for the purpose of IR35 communications, manager is used to denote the individual who engages a contractor to perform work in their team.