Towards the end of last year, we published a news article about the changes to IR35 for public sector workers. With the changes now less than a month away we thought it would be a good time to remind those who could be affected. The new legislation applies from 06th April 2017.
The changes are being brought in by HMRC to tackle the perceived problem of the correct application of the IR35 legislation. Unfortunately, the changes are likely to have an impact on some individuals who would be outside such legislation. This is because some hirers will no longer take the risk of sub contracting to Personal Service Companies operating in the public sector due to any potential liability which could be placed on them.
If you think these changes will have an impact on you then please give the team at Sterling a call. We offer a range of routes for contractors and are experienced in dealing with IR35. One of our team will be happy to look at your current circumstances and the options available to you.
Those operating on our umbrella route will be unaffected and Sterling umbrella may be an attractive option for some individuals who may need to reassess their circumstances in light of the changes.
What are the changes?
From 06th April 2017 individual contractors carrying out work for public sector organisations will no longer be responsible for determining their own IR35 status.
That responsibility will now move to the hirer. This means that recruitment agencies (or the organisation if they have enlisted a contractor direct) will be responsible for determining the IR35 status and ensuring the right tax and NI is deducted and paid over if applicable.
Who will be affected?
Contractors carrying out work for public sector organisations which for this purpose means they are covered by the Freedom of Information Act 2000 and Freedom of Information (Scotland) Act 2002.
Below are examples of the main areas covered by the new legislation:
This legislation does not apply to services that are fully contracted out by the public sector body to a private third party, who are responsible for delivering the service for a set contract price and not simply delivering a set labour supply. A simple example of this would be a hospital outsourcing the construction of a new wing to be delivered for a contract price irrespective of how much labour was used during construction. Any PSC used on this project would be deemed not to be operating in the public sector, but merely working on a project being constructed for the public sector body.
How Sterling can assist you
If you have any questions or concerns about the changes, please get in touch with the team at Sterling. We will try to assist our contractors and recruitment agency partners and to minimise any disruption caused by the changes. Our umbrella route will be the best option for some of those individuals affected by the IR35 changes. You can find out more about the benefits of our umbrella service here. Registering is straightforward and we will help to make the transition as smooth as possible.