With the last grains of sand in the IR35 countdown trickling inexorably through the hourglass, contracting professionals can no longer afford to ignore the fact that a much tighter IR35 regime is fast approaching. The Government’s new rules will take effect in a matter of weeks, on 6th April, and it will apply to all contractors currently working in the public sector via their own personal service companies.
The reformed IR35 rules will transfer responsibility for determining a contractor’s tax status from the individual contractor (as now) to the public sector end-client or recruitment agency. It is widely expected that in the absence of a reliable, fast and easy-to-use means of accurately determining a contractor’s IR35 status, those responsible for paying him or her will be driven towards a thoroughly risk-averse stance by making an all-encompassing decision to re-designate independent professionals en masse as inside IR35.
This will either force contractors onto the payrolls of public sector bodies (PSBs), which polls strongly suggest that most contracting professionals will refuse, or compel them to pay the same NICs and tax as employees with none of the statutory benefits of employee status (e.g., paid sick leave, employer pension contributions, paid maternity leave and paid holiday leave).
Thankfully, a solution is readily available for contractors who fear that they may be caught by the new IR35 rules. It takes the form of a free online IR35 status test from Umbrella Company group Unitum, a leading conglomerate providing personal, tax and employment advice to contractors, agencies and end-clients via its subsidiaries, Crystal Umbrella and Atlantic Umbrella.
The online questionnaire, which takes a matter of minutes to complete, is meticulously designed to give an accurate assessment of an individual contractor’s IR35 status. It is a thorough “working practice” test covering crucial areas such as whether or not a contractor has control over when to undertake work and whether or not he or she is subject to supervision or direction over tasks that are to be carried out. The questionnaire was compiled by tax specialists and given the final seal of approval by an experienced barrister.
Details entered into the questionnaire by contractors (it is a self-assessment tool only) will remain strictly private and will never be passed on by Unitum to any outside parties.
This tool will also be of immense value to people who are new to contracting, as many may decide to work as PAYE Umbrella Company Employees if their contract falls inside IR35. This option allows all the flexibility of contracting but safely protects freelancers from stressful and time-consuming IR35 investigations by HMRC.
Unitum’s free online IR35 test is available here.