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An End Client’s Guide To IR35: Your Questions Answered

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Nicola Knight blog, nursing, nurses...

As part of the IR35 private sector reform, the responsibility for determining employment status for tax purposes has shifted to the end client – also known as the engager. It’s safe to say this has caused major teething problems for businesses like yours, and led to a loss of talent.

To gain perspective, let’s backtrack. Despite IR35’s existence since 2000, the government felt that too many limited company owners were still sidestepping the legislation. That’s why, in 2017, the public sector was subjected to a reformation of the rules, with the private sector following suit four years later.

Now, once you’ve determined whether a contract lies inside or outside IR35, the contractor’s agency will conduct a secondary review. But assessing individual projects case by case has proved challenging, and prompted businesses to class everyone as inside IR35 – a move which makes attracting and retaining talent extremely difficult.

So, where do you go from here? Our new partner, Workr, has provided answers to your key questions below.

It’s not my responsibility to make sure our contractors are compliant. We just need nurses. 

The new legislation has made compliance your responsibility. 

All public authorities and medium and large-sized clients outside the public sector are responsible for deciding if the rules of IR35 apply.

If the wrong decision is made, you (the end client), will be responsible for paying the tax owed to HMRC. 

Help, I'm losing Nurses. How can I change this?

First things first, you need to understand why you’re losing talent. Is it because you’ve made a blanket decision that allcontract freelance roles are deemed inside IR35? 

Here’s the key driver: if they are inside IR35 their net take home pay will be affected by around 25% to 35% under the PAYE/NI rules. 

Many end clients have renegotiated their rates to lessen the impact of this, ensuring they are still attractive to candidates. Vetro can help you to conduct a full salary review of clients agency rates in your geographical locations to make sure you are competitive. 

What are the consequences for non-compliance for my business? 

You, the end-users will face liability for unpaid tax in situations where you:

  • fail to take ‘reasonable care’ when issuing the SDS (Status Determination Statement),

  • issue an incorrect SDS,

  • or, fail to deal with the contractor’s challenges to their SDS.

Take back control of contract assessment

Vetro collaborator and IR35 compliance expert, Workr, offers a range of solutions to help you get on top of your contracts and retain crucial talent.

Whether you need SDS guidance or umbrella support, speak to Workr about how they can help. Simply fill out the form below and a member of their team will be in touch.