IR35 and You

12th March 2020

IR35 – April 2020 Important Changes

What is happening on 5^th April 2020?

From 5th April 2020, all contract/temporary workers operating in the UK Private Sector will need to be assessed under the new IR35 legislation.

Who is responsible for the IR35 assessment?

The assessment for determining whether a placement falls inside or outside IR35 will need to be completed by the client. They will need to use a CEST test to determine the status of the placement, with the outcome of either being ‘employed’ or ‘self-employed’.

This information will then be passed onto the recruitment agency who will pay the candidate based on the CEST test result – www.gov.uk/guidance/check-employment-status-for-tax

Who is liable for the incorrect payments to the candidate?

Should the recruitment agency fail to pay the candidate correctly, all three – the recruitment agency, client and candidate will be subject to pay any unpaid taxes and penalties. Liability for non-compliance will rest with the party that has failed to meet its responsibilities under the new IR35 legislation.

What does this mean for Clients?

Before the 5th April 2020, ‘large company clients must assess all current and future contract/temporary placements using the CEST test. This will determine whether their placements are classed as ‘employed’ or ‘self-employed.

How are clients determined “large company clients”?

Clients are classed as ‘large company clients’ if they tick two or all of the following:

Annual turnover of more than £10.2 million
Total balance sheet of £5.1 million
More than 50 employees

What do clients have to submit to the recruitment agency?

Clients will need to provide the recruitment agency with a written Status Determination Sheet (SDS) which will outline their determination of each placement.

Due Diligence

Clients should also perform their own due diligence to ensure that their recruitment agency is complying with the new IR35 rules. This will avoid any liability should the recruitment agency make any incorrect payments to their candidates.