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​IR35 for Recruiters

IR35 for Recruiters
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Contact Qdos Contractor:0116 269 0999
 
 

Guidance for Contractor Agencies

 

IR35: Intermediaries Legislation

For any agencies supplying limited company contractors, it has never been more important to consider IR35, otherwise known as the intermediaries legislation, and ensure that all workers are being engaged on the correct terms and conditions which reflect how their services will be provided to the client.

The recent reform to IR35 within the public sector means that agencies supplying contractors to the public sector are financially liable for the tax status if, after an enquiry, HMRC considers that the agency did not pay the contractor correctly. There is also a lot of discussion and general industry opinion that this reform will also be rolled out to the private sector in the near future.

Additionally, contractors will look to work with agencies who may be more sympathetic and amenable to making considerations concerning IR35, and legal disputes concerning contractual terms can also be avoided where all parties are in agreement to all of the terms surrounding an engagement.

What is the IR35 legislation?

 

The ‘Intermediaries Legislation’, commonly known as IR35, was introduced in April 2000. The legislation is intended to tackle the perceived tax abuse by an individual who would be treated as an employee of their client, were it not for their personal service company (PSC) acting as an intermediary.  Working in this manner enables an individual to make substantial tax and NI savings.

During an IR35 enquiry, if HMRC decide that an engagement is ‘caught’ by IR35, they will calculate a deemed payment, treating all income received as salary and demanding all tax and national insurance contributions on payments originally paid out as dividends.  New rules concerning Travel and Subsistence were introduced from 06 April 2016 and additionally mean that for any contractors determined by HMRC to fall inside of IR35 following an enquiry, any travel and subsistence expenses claimed for ordinary commuting will not be allowable.

How does IR35 affect you as a recruiter?

 

When placing contractors operating via their own limited company, otherwise known as a personal service company (PSC), IR35 will likely become a topic of conversation.

If you are placing a contractor in the public sector, you will be highly involved in the IR35 determination of your contractor - please click here for more information.

Before taking on a role, most contractors will want to take independent due diligence of the contractual terms in relation to IR35. To do this may take a few days depending on the service, and should any amendments be suggested in the review, the contractor will likely wish to have these changed.

As a recruiter, you can help by mediating any changes with the legal team where required. It is also important to note that the upper level contract (i.e. the contract between your agency and the end client) can have a decisive impact on a contractor's IR35 status. Any discrepancies between this contract and that between the agency and contractor, can cause the contractor to lose an investigation into their accounts. There should therefore be no discrepancies between the contracts - this can also assist with any contractual disputes where terms differ between the contracts, such as notice periods.

​By having a general understanding and appreciation for the difficulties associated with the IR35 legislation, you can build a better rapport with the contractors you place, therefore developing a pool of dedicated contractors for your end clients. We have a wealth of IR35 guidance on the website if you would like to learn more.

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The Company

 

About us

Why Qdos?

 

We are a UK leading specialist on the IR35 legislation, completing over 600 contract reviews each month and successfully handling over 1,500 status enquiries on behalf of contractors, saving them over £35million in tax. Our dedicated team of specialists are on-hand to provide advice over the phone, via online chat or email as part of our full-service offering, and partners and contractors alike are assigned an account manager to deliver a personal service, whether we speak with you once a week or once a year.

 

Our History

 

Qdos started out as a tax consultancy firm in 1988, set up by ex-Revenue inspectors, and focussed its expertise on contractor tax with the introduction of the IR35 legislation in 2000. Qdos has now become a leading provider of contractor compliance services in the UK, recognised for many awards including the Queen’s Award for Enterprise in Innovation, and featured in the London Stock Exchange’s ‘1000 Companies to Inspire Britain’.

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