IR35 Rules: Ensuring Your Business is Complying with the New Changes

July 19, 2021

 

On 6 April 2021, significant changes were made to the off-payroll working rules (IR35 rules).

In light of these changes, our Employment & HR experts outline everything you need to know about the IR35 rules and how to ensure that your business is fully equipped to comply with them.  

What were the changes?

The IR35 rules are designed to ensure that an individual who works like an employee, but through their own limited company (usually a personal service company ‘PSC’) or other intermediary, pays broadly the same Income Tax and National Insurance contributions (NICs) as other employees.

When the IR35 rules apply, any business which engages an individual contractor through an intermediary is responsible for determining the employment status of the contractor engaged for tax purposes.

Whilst the IR35 rules previously only applied to public sector clients, on 6 April 2021, the off-payroll rules were extended to apply to medium and large private sector clients with a UK connection.

What is a medium and large client?

For the purposes of the IR35 rules, a client is considered to be medium or large if they are not defined as small. A corporate entity is considered small if it satisfies two or more of the following requirements:

a)       Its annual turnover is not more than £10.2 million

b)      Its balance sheet total is not more than £5.1 million

c)       It has not more than 50 employees

What do you need to do if the IR35 rules apply?

If the IR35 rules apply, you must determine the employment status of every worker you engage who operates through an intermediary. If the circumstances of the engagement indicate that the contractor should be classified as an employee, rather than a self-employed contractor, you will be responsible for deducting Tax and NICS.

In addition to determining the contractor’s employment status, you must create and issue a status determination statement outlining the reasons given for the status determination.

How we can help

We can provide the following support to help your business navigate the changes to the IR35 rules:

  • Application of the IR35 rules: advice on the likelihood of the IR35 rules applying to new and existing contractor engagements

  • IR35 status determination: advice on the employment status of individual contractors

  • Internal policies: reviewing existing internal processes for the application of the IR35 rules and/or providing new template policies and documents

  • Training: staff training on the IR35 changes including advice on status determinations

 

 

Contact Our Team
Catherine Burke
Partner
View Profile
Damian Phillips
Partner
View Profile
Fflur Jones
Managing Partner
View Profile
Gareth Wedge
Partner
View Profile
Mark Rostron
Partner
View Profile
Nick O’Sullivan
Partner
View Profile
Owen John
Partner
View Profile
Rhodri Lewis
Partner
View Profile
Stephen Thompson
Partner
View Profile

I have worked with Darwin Gray for a number of years and the level of service, professionalism and timely response is second to none. I would highly recommend Darwin Gray to any business.”

Becs Beslee, Dice FM Ltd

Darwin Gray have provided us with a first-class service for many years now. They really take the time to understand our business and develop relationships which results in advice and support that is contextualised and effective.”

Rebecca Cooper, ACT Training

We have worked with Darwin Gray for several years and have always found their services and advice to be first class.”

Karen Gale, Stepping Stones Group

An extremely professional and sincere company who make time for your queries and understand the need to break down certain facts and information to ensure everything is understood perfectly. I would highly recommend the company to anyone looking for any type of legal advice”

Gwawr Booth, Portal Training Ltd

PSS has worked with Darwin Gray for many years. We have always received an excellent service. Prompt and professional advice and support.”

Ledia Shabani, Property Support Services UK Ltd

We have used several departments within DG recently and we have been very pleased with an effective, efficient and down to earth service. Very happy thus far and I expect that we will continue to use DG.”

Guto Bebb, Farmers’ Union of Wales

Darwin Gray offer us truly superb services. Very professional, quick and services available bilingually which is very important to us, highly recommend.”

Iwan Hywel, Mentrau Iaith Cymru

My “go to” in urgent and time sensitive cases for direction, support and advice. The team are quick to respond to calls or emails for advice and support on all matters. Always explain complex matters in a way a lay person can easily understand.”

Margot Adams, Guarding UK Ltd