Working for yourself as a limited company director means getting your head around a number of pieces of legislation. Arguably one of the most important – yet complicated in the contractor market – is IR35.
Making sense of IR35 has become even more important for public sector contractors with the recent IR35 legislation changes that came into play from April 2017. The changes mean that contractors working through their own limited companies within the public sector no longer determine the IR35 status of their contract themselves. Rather, the decision falls to the public sector body they are working for.
It had been reported that many public sector bodies would be treating each of their contractors in the same way - by determining that all contracts are inside of IR35 – rather than looking at each contract on a case-by-case basis.
If you believe that your contract has been wrongly decided as being inside IR35 by a public sector client, you don’t have to take their decision as final. Our short guide below outlines what steps you can take if you believe your public (or private) sector contract has been wrongly placed inside IR35.
Is my Public Sector Contract Inside IR35?
Firstly, you need to be sure that your contract is actually outside of IR35. If you’ve been contracting for a long time and already have a good grasp of IR35 you may find this easier than if you’re new to the world of contracting. HMRC’s Check Employment Status for Tax Tool may be helpful.
With the decision of determining IR35 being taken from your hands, it is more important than ever to ensure you have a good grasp of the IR35 legislation. Our Essential Guide to IR35 may be useful.
Speak to an IR35 Specialist
Whether you’re absolutely certain that your contract has been wrongly determined as inside IR35, or you still need some help in making the decision, it’s time to speak to an IR35 compliance specialist. The specialist will be able to look at your contract and make an assessment over whether or not they think the contract should be inside or outside IR35.
Speak to your Public Sector Client
If the IR35 specialist’s review ascertains that your contract is outside of IR35, you can present this information to the Public Sector client. How you choose to do this is up to you; if you can set up a face to face meeting than that may be better however if this isn’t possible a phone call or email to present your thoughts and the results of your IR35 review can also work.
What if the public sector client still insists my contract is inside IR35?
If after presenting your review to the public sector client they still insist that your contract falls inside IR35, all is not lost. You can contact HMRC and ask them to review the decision. Find out how to get in touch with HMRC on their IR35 enquiries contact page.
How can ClearSky help?
At ClearSky Contractor Accounting, we’re able to offer our clients IR35 reviews to ensure you always have peace of mind on whether or not your upcoming or existing contract is likely to fall inside or outside IR35. For more information please give us a call on 0800 464 0382 or speak to your dedicated contractor accountant.