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IR35 - information for Freelancers

What is IR35?

IR35 is an HMRC initiative to uncover what they consider to be disguised employment within the UK contractor workforce. This legislation impacts contractors who are working through their own intermediary, often a limited or professional services company, also known as off-payroll workers. The change in legislation will come into effect on 6th April 2021.  If you missed our Webinar covering all things IR35, you can tune in to a recording of it below.

How does it affect me?

Each assignment that you undertake will need to be determined as either OUTSIDE or INSIDE IR35.  You will also now start to see new roles advertised with this information included. To find out more about how these determinations are reached, you can download our Freelancer Guide – HERE.
 
As of the 6th April 2021, the responsibility to determine IR35 status will (in some cases) be shifted from the Contractor to the fee-payer (the recruitment agency / us or your direct end client).
 
If the assignment is deemed to be INSIDE IR35 then the correct action must be taken by the fee-payer and that means your payment for the assignment will need to be taxed at source rather than paid gross to your limited company. 

Can I avoid being impacted by this change?

Yes and No.
 
Yes – The change in legislation will not apply to assignments you take on for HMRC defined SMALL BUSINESSES.  To be qualified as a small business a client needs to have: fewer than 50 employees, an annual turnover of less than £10.2 million and balance sheet assets of less than £5.1 million.  We can help you confirm this, speak to your Profiles Creative consultant.  If you need support, we’re happy to help you navigate this qualification with your direct clients too.
 
Yes – You can decide that you will only accept bookings which fall Outside IR35.  Just let us know that’s your preference and we will only brief you on those bookings.
 
Yes – we will work with our Freelancers and our Clients to make sure everyone is educated on how IR35 determinations are reached. More specifically, we will work with Clients to create outside IR35 assignments where possible and lawful. We have invested heavily into a compliance infrastructure which gives us as accurate a determination as possible.  Read on to find out more about our Profiles Protect solution.
 
No – If an assignment is determined by a client as being Inside IR35 and they are not defined as a small business in HMRC terms, you can appeal the decision. If evidence is found to support your claim you may be moved to Outside IR35, if not, then you will remain Inside.

Read our FAQ for Freelancers - HERE.

Profiles Creative –Supporting you through the changes

You’ve received an Inside IR35 determination, what now?

  • Make sure you agree with the determination by completing your own assessment. Talk to your Consultant if you are unclear.
  • This might be an appropriate situation to consider using one of our Profiles Protect tools, your Consultant will guide you on this.
  • Consider your Payroll options: PAYE, Umbrella, Limited Company but with deductions taken from gross pay as per HMRC’s guidelines. We offer all of these payment options.
  • If you are rebooked with a client, you will not necessarily need to complete a new assessment. Provided the working conditions remain the same, the previous SDS will cover the new assignment.
  • Complete the booking and time sheet process as normal – everything else remains the same. 
Profiles Protect Solution

We want every Client and Contractor to feel confident that when they brief to us or accept an assignment from us, they are working in a totally
compliant and commercial way.

The HMRC CEST tool, whilst it is an obvious starting point for every booking, doesn’t always reach a determination. We are also cognisant that
there may be occasions where either or both parties may not agree with a determination and would like the opportunity for further review.

We’ve scoured the market and have elected to partner with two leading suppliers of IR35 assessment and insurance. By choosing to engage
two specialists, we are able to offer the fastest and most comprehensive cover on the market.

Why is this important?

Clients – it gives you safe access to the widest pool of active Freelancers. Some Freelancers may choose to only accept assignments through their PSC that fall outside IR35.

Freelancers – it gives you access to the widest scope of assignments across businesses who otherwise might only engage you on an Inside IR35 basis or through an Umbrella / paid as PAYE.

The initial assessment using our advanced Profiles Protect tools will be fully funded by us. Should you then require either further support from a specialist IR35 professional OR would like to secure Insurance to protect an outside IR35 determination then we can supply these to you, through our partners at a very reasonable and reduced cost.


Resource links:

Download our Freelancer Guide - HERE
Read our FAQ for Freelancers - HERE
Jump to FAQ in the Webinar - HERE

 

 

 

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