VIQU’s Client Guide To IR35

In April 2021, the government introduced major changes to the off-payroll working rules – IR35. As a specialist contract recruiter and business owner, I understand the concerns and questions many businesses have over IR35.

In this video, we provide a guide to IR35, explaining the steps businesses must take in order to comply with IR35 tax legislation.

Full Transcript of VIQU’s ‘Guide to IR35’ Video:

IR35 legislation can be a bit of a minefield, but that’s where VIQU can help.

Put in simple terms, IR35 is a government legislation which determines how the HMRC tax temporary workers here in the UK.

Inside VS Outside

If you engage with a temporary worker or contractor, and treat them similarly to their permanent counterparts, then it’s likely they are going to be taxed PAYE. This is called Inside IR35.

If, however, you engage with a worker and treat them like a specialist in their field, then there could be significant tax benefits for them. By specialist I mean that they manage their own workload, deliver a specific piece of work and get paid through their own limited company. This is called Outside IR35.

Changes to the IR35 legislation

In 2021 the legislation was amended requiring you (the employer) to do an Inside vs Outside IR35 determination. You must be careful though – if you do not get this right, you could be liable for any unpaid tax.

We have seen some employers taking a risk-averse approach and placing all of their contractors Inside IR35. With the demand for highly skilled IT professionals, these clients are not finding the quality and quantity of candidates they need in the market.

So, we are recommending that you the employer do an individual IR35 determination per worker you bring on board. Whether that’s directly or through an agency like VIQU.

Making the IR35 determination

So, the big question is, how do you make an IR35 determination?

HMRC launched an online tool called the ‘Check Employment Status For Tax’, – often abbreviated to CEST.

CEST

You will find the CEST tool on the HMRC website. We have also provided the link for you.

It will ask you a set of questions about how you would like to engage with the contractor on a specific opportunity. Once completed, it will offer up an IR35 determination.

HMRC has said that should you answer these questions accurately, they will honour any determination given. However, if the way you engage with your contractor changes, you would need to do the CEST tool over again as the initial IR35 determination given may no longer be valid.

We are here to help

At VIQU, we are specialists, working with both clients and contractors in the IR35 space. If you have any questions, or if you need an IT contractor at the moment, please don’t hesitate to get in touch. We are here to help.

Contact VIQU

Email: ir35@viqu.co.uk

Call VIQU’s Southampton office: 02382 124 124

Call VIQU’s Birmingham office: 0121 227 8200