Services - Employment Status, Contractors, IR35

Employment status, contractors and IR35 advice

For relationships between businesses and contractors, the matter of whether contractors are employed or self-employed may not be quite as simple as it might initially seem.

The introduction of Construction Industry Scheme (CIS) tax deduction legislation has caused some to believe that the question of employment status is a new issue. Whilst certain considerations do apply specifically to CIS, core conditions governing employment status already lay firmly enshrined in UK law. As before, it remains crucial that this issue is addressed carefully at the outset of working relationships.

For contractors, we can review your circumstances, help you to set out a contract for providing your services and, with the benefit of our professional insight and experience, offer our opinion regarding whether we would expect you to be deemed as employed or self-employed by HM Revenue & Customs (HMRC).

Similarly, for employers, we can provide our opinions on contracts and whether we would expect contractors who are carrying out work on your behalf to be regarded as employed or self-employed.

Ultimately, the decision regarding how to treat any given contractor rests with the employer, who will be liable for costs including tax, penalties and interest in the event that HMRC disagrees with their categorisation. On top of this, the "employee" would also be entitled to employment rights and protection, including in respect of unfair dismissal, maternity leave, holiday pay and more.

For both employers and contractors, we can also help you negotiate with HMRC in the unfortunate event of an employment status-related dispute.

Basic factors for employers and contractors to consider when determining whether an individual is employed or self-employed include:

Where control is vested;

The right of substitution;

The existence or degree of mutuality of obligations;

Further factors that also have a bearing on a person's employment status include:

Responsibilities for providing necessary equipment;

Where financial risks lie;

Whether there is an opportunity to profit from sound management;

Arrangements for termination of the working relationship;

The nature and extent of any benefits provided;

The underlying intentions of both parties;

The duration of the engagement.

For more information and help in clarifying your own arrangements, whether as a contractor or an employer, please get in touch.

Want a quote for employment status advice?

To discuss how we can help advise YOUR business on employment status, give us a call on 0330 111 5010 or complete our contact form. We'll be pleased to provide you with a free quote, without obligation.

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