IR35 Changes in April 2020

What is IR35?

IR35 is a tax legislation which came into force in the year 2000.  Its purpose was to address and identify individuals who were avoiding having their earnings processed via PAYE by using a corporate entity to achieve a more efficient and lower tax deduction.  The legislation allowed HMRC to challenge those people who supplied their services to a client via a company (whether that was a Personal Service Company, Managed Service Company or Composite Company) and who HMRC felt should have been classed as a “disguised employee”.  This basically allowed HMRC to pierce the corporate veil from a tax perspective and ensure that they paid tax in the same way as a permanent employee.

IR35 therefore introduced two types of contractors  – those that are “Inside IR35” who are deemed to be employees, and who make PAYE deductions from all contract earnings and those that were “Outside IR35” because they provide a genuine service, in business on their own account, with significant financial risk and no mutuality of obligation so they should not be subject to the tax treatment applicable to employees.

Blunt Tool

This legislation wasn’t as successful as anticipated and was subject to much criticism. It failed to provide a clear test of what an ’employee’ and a ‘genuine business’ actually was, and it also left the legal responsibility for determination up the individual as to whether they fell inside or outside of IR35.

In 2017, HMRC changed its approach, issuing new legislation directed at the public sector and redirecting the legal responsibility for determining the status of a contractor to the end client. This legislation will now be rolled out to the private sector in April 2020.

Why is this important to me?

From April 2020, recruitment agencies and clients will need to work closely together to ensure the correct tax determination of any limited company contractor that is placed on site.  This is not a new concept. Since 2014, similar considerations have been in place regarding the self-employed – only those contractors not under (or subject to the right of) supervision, direction and control are eligible to receive a CIS payment.

According to the legislation and guidance, clients must take reasonable care when assessing and classifying whether a limited company contractor falls inside or outside of IR35. Emphasis is also put upon carrying out individual determinations, and avoiding blanket policies. Clients are expected to carry out the determinations and pass these down the chain via their recruitment agencies to the limited company contractor, who has a right to challenge that decision via a complaints procedure.

Penalties and fines will be imposed where the failure to adhere to the legislation has occurred. For example; where a client has failed to use reasonable care to complete a determination leading to an underpayment of tax, the client will face penalties. Where the agency has not made appropriate tax deductions to the limited company contractor’s pay, the agency will face penalties.

Accordingly, both clients and agencies will need to modify internal procedures and upskill staff to be able to correctly identify and apply the new legislation.

Net Temps are already working collaboratively with clients to ensure that procedures are in place for adhering to the new legislation; which also applies where subcontractors are paid directly by clients via limited companies.

Current considerations include; amongst other matters:

  • Assessing the contractor population in order to determine the extent of the problem;
  • Identifying which staff of the client should be responsible for issuing status decisions and at what stage of the recruitment lifecycle;
  • What considerations should form part of the Status Determination;
  • Maintaining suitable records
  • Looking at the cost implications of the status determinations whether that is inside or outside IR35.

If you are a client or a limited company contractor and wish to find out more about IR35 and its impact, call us on 0115 9400 968. We’re happy to help.

Happy Halloween

Today we held a Halloween themed sales event. Our ghostly ghouls, vampires and witches stepped up, making positive recruitment connections with both new and old clients. Don’t our construction recruitment consultants look frighteningly good?

Anti-Slavery Day

 

Today is Anti-Slavery Day and our Claire Carter is attending a modern slavery awareness event hosted by the Lincolnshire Police, supporting the eradication of slavery and human trafficking in business and supply chains. We are proud to support this important initiative. You can view our Modern Slavery Policy here:  http://www.net-temps.co.uk/modern-slavery-policy/

VAT Reverse Charge Delayed

HMRC has reflected upon its decision to implement the VAT Reverse Charge on 1 October 2019, after concluding that UK businesses have had insufficient time to prepare.

Accordingly, it has decided to delay implementation for a period of 12 months. The VAT Reverse Charge will now operate from 1 October 2020. The link below provides additional guidance:

https://www.gov.uk/government/publications/revenue-and-customs-brief-10-2019-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation/revenue-and-customs-brief-10-2019-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation

Building the Next Generation of Construction Professionals

 

Net Temps is grateful to NMCN who sent Harry (pictured) a box of goodies with a letter encouraging him to pursue a construction career after learning of his ambition. Harry was thrilled by this thoughtful gift which strengthened his career ambitions.

Contacting us on Thursday 23 May 2019

This morning (Thursday 23 May 2019), Net Temps shall be installing a new telephone system. You may therefore experience intermittent issues contacting us on our head office number 0115 9400 968 whilst this important work is carried out. All staff will be contactable on their mobiles and by e mail at all times today. If your matter is urgent, please e mail joanne@net-temps.co.uk and we will endeavour to deal with your matter as quickly as we can. We apologise in advance for any inconvenience caused and thank you for your patience and consideration.

 

April Increase in Worker Pay

 

Increase in Worker Pay

New National Minimum Wage rates and Living Wage rates will come into effect from 1 April together with a mandatory increase in both worker and agency pension contributions from 6 April.

 

The National Minimum Wage (NMW) & The National Living Wage (NLW)

The NMW and the NLW are the minimum wage per hour that a worker is entitled to receive in the UK. These rates are reviewed annually by the government and must be reflected in a worker’s hourly rate rates from 1 April.

The new rates are set out in the table below:

 

Pension

The Pension Act 2008 requires all UK employers, including Recruitment Businesses to enrol eligible workers into a pension scheme. Once enrolled those workers are entitled to receive a minimum level of pension contributions. From 6 April, these mandatory pension contributions shall increase as set out below:

Follow Up

Should you require further information regarding the contents of this article, are a client requiring positive recruitment solutions or are a worker or candidate requiring our work finding services please call us on 0115 9400 968.

 

 

Employee Appreciation Day

 

 

Employee Appreciation Day 2019 at Net Temps Limited. Creating Positive Recruitment Connections. Call us on 0115 9400 968 for all your temporary and permanent construction recruitment requirements.

 

Christmas & New Year Message

 

Net Temps would like to wish its clients, candidates and temporary workers a Merry Christmas and Happy New Year.  Our Christmas jumper clad team look forward to continuing to provide positive recruitment solutions in 2019. In the meantime, should you be a client looking for temporary or permanent construction professionals or a candidate or temporary worker looking for a new role, don’t hesitate to contact the Net Temps’ construction specialists on 0115 9400 968.

Charity Fund Raising on Spooky Recruitment Day

 

Net Temps hosted its second annual “Spooky Recruitment Day” last week with the important goal of raising further funds for its two nominated charities – The Teen Cancer Trust and the Ilkeston Dialysis Unit. As well as staff voluntary donations for fancy dress, the day also incorporated “Best Pumpkin in Show” and a charity prize auction enabled by generous donations from local businesses.  To date, we are pleased to announce that we have raised over £1,000 for our chosen charities and we would like to thank the following local businesses for supporting our auction event:  Morrisons and Tread Mark Tyres in Colwick, Bon Appetit and Boots in Netherfield, Sauce & Brown, Lyreco, Brewhouse Kitchen, Notts County Football Club and Support Stack Limited.

We’re Face Fit Ready

 

Face fit testing is a means of assessing how well a respirator seals to a face, which is really important for health and safety reasons when carrying out work in dusty construction environments.

Our consultants received refresher training in this important service that we provide to our clients. Other services include drug and alcohol testing, asbestos awareness training and manual handling training. If you are interested in receiving further details of the comprehensive construction centric temporary and permanent recruitment service that we offer, please call our office today on 0115 9400 968.

 

We’re adding to our Teams

 

Monisha Amos joins Net Temps as a Recruitment Consultant after hearing about our welcome pack, friendly team and comprehensive induction.  Welcome to the team, Monisha !

We’re still expanding our teams due to client demand, and looking for sales focussed individuals with excellent client care skills. Visit our   Join Us  page on our website for more information.