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IR35 as an Employer

One contractor hired through a Recruitment agency

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Afternoon All,

Looking for some advice for our company. We have 1 software contractor for our R&D department and was wondering how IR35 would effect us as the employer even though he is paid through an agency. 

Is there anything our company need to do? Or just keep paying the agency as usual?

Should the contractor do anything?



Replies (4)

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By Accountant A
27th Feb 2020 11:38 wrote:

Afternoon All,

You're not in the UK then? Still morning where I am.

You'll find an accountant to advise you here:

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By paul.benny
27th Feb 2020 11:40

Strictly, you should make an assessment of whether the engagement falls within IR35. If so, you should account for PAYE and NI on the amounts payable for the contractor's services. If they are any good, the agency should be able to assist you in making the assessment and, if necessary modifying the terms of the engagement to ensure it is outside IR35.

On the other hand, you could take a gamble that HMRC will concentrate on larger companies employing numerous contractors and will not pay any attention to companies like yours with a single contractor.

If you take that gamble, I would still review the terms of the engagement to reduce the risk if you are caught out.

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Replying to paul.benny:
By David Heaton
27th Feb 2020 12:36

The Off-Payroll Working (OPW) changes are confusing everyone, not least because the government is still making changes to the proposed rules.

Firstly, you need to think about whether the new rules apply, and if so, when and how.

You may have NO obligations and no risk, and since there's an agency involved, even if the rules do apply, you do NOT have to deduct or pay any PAYE or NIC, as that falls to the agency - you just pay them the agreed gross invoice value. In such a case, you just need to make a status determination and tell the agency and the contractor.

There's no obligation to deduct or report anything at the moment, assuming the company is in the private sector - it doesn't kick off until the contractor is first paid for work done after 6 April 2020.

If the company is 'small', there's no obligation on you (yet) to do anything, as the IR35 obligations rest and will stay with the PSC. However, the government may yet impose a duty on the client to tell the contractor and any agent in the supply chain about the client being 'small'. As a matter of good practice, you should do this anyway, as it makes life easier for all concerned.

If the company is not 'small', you need to assess whether the contract would be in IR35 and issue a status determination statement in time for the first payment for work performed on or after 6 April 2020. The agency and the contractor deal with the rest of the implications.

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By Duggimon
27th Feb 2020 11:42

Unless you are a medium or large enterprise, the responsibility for determining IR35 status lies with the contractor, not you.

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