In its simplest terms IR35 is a piece of legislation put in place to ensure that self employed workers/contractors are truly self -employed and not disguised “workers” or “employees” if the self employed person is in fact an employee or a workers, then you would be required to make NI contributions, pay a contribution towards their pension and they would also have to pay Tax on their earnings.
The extension of the IR35 rules to the private sector took effect on 6 April 2021. However, HMRC have stated that it would be taking a “light touch” to enforcement penalties during the first 12 months of the new rules, unless it had evidence of deliberate non-compliance.
Now that the light touch approach has now expired, it’s time to ensure that any contractors/freelancers that you work with meet the IR35 rules. In any event, they should be regularly reviewing status determinations to ensure that they are still accurate.
Under the rules, the organisation engaging the contractor is responsible for determining their employment status and assessing whether IR35 applies. If IR35 does apply, the organisation that pays the individual’s fees is deemed to be their employer for tax and national insurance purposes.
We have created an IR35 pack for our clients that you can purchase for just £250 which includes a letter to give the contractor/freelancer to explain your obligations and what information is required from them, a form for them to complete to help you determine their status and a process that you can follow to ensure you are completing your due diligence. Just get in touch if you would like to purchase the IR35 pack or you would like us to complete the due diligence for you.