A Short Guide to HMRC’s Employment Status for Tax Tool

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Months after it was originally announced, HMRC have launched their Check Employment Status for Tax tool.

Now, the title of the tool may not be catchy, but considering how tricky IR35 can be it sounds like it might be handy. The premise is simple; put in some details about the current contract and the tool will give you an indication of whether or not the contract is inside or outside IR35.

Use the Check Employment Status for Tax tool.

Who can use the Check Employment Status for Tax tool?

The tool is intended to be used by the end client, the agency or the worker themselves. It is important to note that within the public sector, the final decision on whether the contract will operate inside or outside of IR35 will be made by the end client, regardless of any results that a worker obtains using this tool. In the private sector IR35 classification is still the responsibility of the contractor.

What contracts can be checked using the tool?

The tool can be used for current or future contracts, either in the public or private sector. The tool asks about the terms contained in your contract and how the work is carried out. This relates to current IR35 guidelines that working practices are taken into account and the terms included in the contract must be mirrored in the working practices.

What questions does the tool ask?

The questions asked by the tool begin with discovering the set up around the contract (who the contractor is and what business structure they work in) before moving on to deciphering who is able to control the performance of the work done under the contract. This allows the tool to create a full overview of the contract.

How is the result of the tool used?

HMRC have stated that they will stand by the result obtained by the tool, unless it is found during a compliance check that the answers given to the tool were inaccurate or an arrangement has been put in place designed to get a particular outcome from the service. We’d advise that you either print or save as a PDF the results of the tool for your records.

How can ClearSky Contractor Accounting help?

At ClearSky we’re IR35 experts and provide unlimited IR35 reviews for clients on our Assure and Executive packages. If you have questions on IR35 or you have concerns that your current contract may fall into IR35, there’s no need to panic. Our implications of being inside IR35 guide can help, or you can give your personal accountant a call who will be able to answer any questions that you have.