What does this mean in practice?
You need to enter the relevant information about each individual work assignment/service into the HMRC online CEST (Check employment status for tax) tool.
The tool will give you a ‘Status Determination Statement’ (SDS) stating whether IR35 applies.
IR35; inside or outside?
If your SDS states IR35 does not apply, then the assignment is deemed ‘outside’ IR35 and it’s business as usual for all parties and the worker may provide services through a PSC.
If the SDS states IR35 does apply, the assignment is deemed ‘inside’ IR35, and a different tax and NI ruling applies to the worker.
You need to share a copy of the SDS with the supplying agent (e.g. IntaPeople) and the worker, who has the right to appeal against this decision.
IR35 and umbrella companies
For assignments deemed ‘inside’ IR35 the worker is considered, for tax purposes, to be an employee of the end client and therefore subject to PAYE tax and NI contributions. Contractors currently employed and working as a PAYE employee of a UK based compliant recruitment business or ‘umbrella/payroll company’ will be unaffected.
Will this affect your workforce?
Hiring organisations and workers will adapt. The key is to avoid viewing the tax as the most important issue; it’s not. Skilled flexible contract workers will always be needed, and the market will always determine the rates.