Advising on IR35 / contractors and preparing status determination statements

Nick Hobden was contacted by a metals supplier in Kent. They were looking to get to grips with the amount of contractor suppliers that they had working for the business and whether providing their services though personal service companies (PSCs), would make them liable to scrutiny by HMRC under the new off payroll IR35 tax rules. Under the rules coming in to force from 6 April, HMRC can look behind any contractual arrangements with intermediaries to establish that the director and shareholder of the personal service company are employees of the end user client in all but name.

It was necessary for Nick and his team to review the existing supplier contracts and advise on the position of those with as well those without contracts.

The existing supplier agreements were almost 16 years old and Nick helped the client understand them better in light of today’s legislation. He highlighted the areas of concern and made an assessment as to whether a PSC bound by them would be more likely to be treated as an employee and liable to be taxed under PAYE and National Insurance arrangements.

Given that the new IR35 regime requires a status determination statement (SDS) to be provided to the intermediary, Nick set about compiling a status questionnaire, from the body of employee and tax status case law for suppliers to complete and then assess whether those contractors were genuinely akin to self-employed.

The aim was to give the client a better picture on who was working for the business and what status they enjoyed. After this process was complete, Nick drafted a template and oversaw the completion of SDS for over 10 contractors who were off payroll. By making amendments to the contractor terms of contracts, to make sure that there was little or no control over how the contractors delivered their services, a genuine right of substitution and  no integration into our client’s business, any risk of the contractors been regarded as employees receded.

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