Your IR35 New Years' Resolutions

12th December 2017
Written by Nigel Nordone

Five IR35 New Years’ Resolutions to Make for 2018

In view of all that’s happened this year, it would be worth making some New Years’ resolutions to address your IR35 status, particularly given that this will likely be determined by the end client in the not-so-distant future, as indicated in the Autumn Budget.

Prior to any official announcement expected next Autumn however, you do remain liable for your status. Here are 5 steps to better improve the prospects of being able to continue to operate as an independent contractor in 2018.

1. Determine your IR35 status

Contract Review
Make sure that in the event of an IR35 enquiry the contractual terms reflect how you are operating and that they support your status. Your actual working practices will carry far more weight in an enquiry however strong contractual terms which positively address all of HMRC’s key tests in determining employment status will help to start it off on the right footing.

Make sure you have your working practices reviewed as part of a contract review, as it will help to provide a much clearer picture regarding your IR35 status.

Undertake an assessment using HMRC’s CEST tool. We would advise a contractor to be cautious in solely relying on the decision generated by it, however combined with independent advice, it can be a useful exercise.  Many public sector bodies are using this, and the likelihood is that if the rules are introduced in the private sector other clients will follow suit, so it will be useful to know how a client may find your status in the future.

2. Talk to your end client

Have a chat with your contact at the end client for whom you’re currently working to understand their thoughts on your IR35 status, and whether they perceive you to be a genuine contractor.  If the end client is supportive of your IR35 status, this can significantly improve the prospects of defending an IR35 enquiry, and opens a dialogue for future changes where they may be in control of your employment status.

3. Consider HMRC’s key employment status tests

Taking the time to do a bit of research and take a look at some case law surrounding IR35 will help to give an idea of the key factors taken into account, how the final decision was reached, and the evidence this was based on. Click here for the IR35 compliance guide which gives an overview of all of the status tests and the case law they were derived from.

4. Collect evidence

If you’ve put into practice one of the key employment status tests, this is going to help considerably, both in the event of an IR35 enquiry and when reform is implemented in the private sector. For example, exercising a right of substitution can be enough to close down an IR35 enquiry.

5. Make sure you have access to ongoing advice

Whilst it’s important to initially check your IR35 status, you need to ensure that you have access to ongoing advice. Things change, whether it be changes to your working practices or changes in legislation, and it’s crucial to establish how such changes are going to affect you. As a Qdos customer, you have access to our IR35 helplines as well as IR35 newsletter.

Nigel Nordone
Written by
Nigel Nordone
Nigel Nordone is the Head of Tax at Qdos, after working for HMRC for over 20 years as a tax inspector. We’ve decided to forgive him for this little transgression as his knowledge of how HMRC handle enquiries and compliance checks is really beneficial for both Qdos and our clients. Nigel specialises in employment status and has personally represented hundreds of clients who have been subject to a HMRC IR35/employment status enquiry.

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