The changes to IR35 rules shift the compliance burden from the self-employed worker’s personal service company to the client (excluding smaller businesses) that they work for, by treating the client user of the services provided as the ‘employer’ for income tax and NICs purposes, thus, you can be liable for backdated tax and NICs if you get this often complex assessment wrong.
We know many of you engage independent contractors, often via personal service companies/ intermediaries. Therefore, after the IR35 rules were extended earlier this year, the risks of backdated tax and national insurance claims, where your status determination of these arrangements is incorrect, are very real; HMRC are certainly keen to audit such arrangements under the new regime.
This recent case of the DWP, who did in fact use the HMRC CEST tool and yet still got it wrong, is a timely reminder to flag the complexity of such assessments and the very real need to have a professional audit of any self-employed arrangements you have in place. We can help you with that too, just contact your lawyer in the team here for an audit.
Checking whether your arrangements are covered by the extension of the IR35 rules or, if they are indeed exempt, ensuring the correct contractual arrangements are in place is now crucial.
You can also use the HMRC CEST Tool: https://www.gov.uk/guidance/check-employment-status-for-tax to get started and if in any doubt, just contact the team for a more detailed audit via our employment team and our tax partners.
For more information contact your team contact, call the office on 0194 360 295 or add your comment and queries below and a member of the team will get back to you.