Contractors' BIG questions around IR35 answered
Posted on 11th March 2021 at 12:34
Unsurprisingly, the changes to off-payroll working rules in the private sector, AKA IR35, which are set to go ahead next month (6th April) is sparking many questions from our network of associates. So we’ve teamed-up with our insurance-backed IR35 status assessment provider, Qdos Contractor, to answer the most frequently asked questions from IT consultants.
Q. As a consultant, can I work Inside and Outside IR35 on different jobs?
A. It is possible to have one engagement found Outside IR35 and another concurrent engagement to be Inside IR35. Each engagement will be assessed on its own merits as per the IR35 status tests, as IR35 applies on a case-by-case basis.
Q. Will IR35 reduce opportunities for contractors?
A. This is difficult to say as the market is currently in the process of reacting to the IR35 private sector reform. Whilst some companies have opted to blanket ban PSC’s, which is reducing some opportunities for contractors, we at Qdos are currently working with many clients and agencies who are continuing to provide opportunities for contractors, whilst taking the best approach to IR35 and assessing IR35 contractors on an individual basis with our Status Review tool.
Q. If I accept an engagement inside IR35, will I be massively out-of-pocket?
A. An Inside IR35 engagement will mean that the necessary PAYE/NIC deductions will be made at source, which will have an impact on the take-home pay of the contractor. However, there are options such as re-negotiating your day rate – or alternatively looking for contracting work in engagements that have been considered Outside IR35. After the private sector reform, an indicative status will be provided with an advertisement which may help contractors in choosing work that is not considered Inside IR35.
Q. If I disagree with my status, is there anything I can do to challenge it?
A. When your client has assessed your status they will provide you with a Statement Determination Statement (SDS) which will detail the reasons for your Outside/Inside IR35 status. Once you have received this SDS, you may dispute the determination and the client has 45 days to respond. If you do choose to dispute your status, it would be ideal to gather supporting evidence to support the reasons which you believe may be inaccurate.
Q. Will HMRC be looking to recover backdated tax for previous engagements it deems to be inside IR35?
A. When the client determines you Inside IR35 after April 6th 2021 it means that they will make the necessary deductions for services provided after that date. If you were in the engagement prior to 6th April, the responsibility for IR35 remains your own. Therefore, your status prior will remain your determination and will still hold a retrospective liability risk. However HMRC has confirmed it will not proceed with targeted campaigns of those who have had a change in status.
Qdos Contractor, the insurance-backed IR35 status assessment process tool helps organisations successfully run their status determination with insurance-backed certification for each engagement, enabling clients to get a straight answer based on government guidelines, along with Qdos’s Tax Liability Insurance which will provide protection in the unlikely event of an enquiry from HMRC.
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