It’s estimated that thousands of independent contractors will be affected by the private sector IR35 changes.
Even though concerns have been raised by organisations who represent contractors, freelancers and consultants, the changes are on track to come into effect in April.
Our ‘IR35 survival guide’ discusses these changes in-depth, and covers your options going forward.
For this article, we’ve decided to focus on answering a question we’re frequently being asked: ‘Should I refuse IR35 contracts?’
The honest answer is that each case is unique, and it all depends on your personal circumstance and whether it makes financial sense to refuse the contract.
For instance, it may be a once in a lifetime-opportunity project and you feel you can’t refuse. Or, if the market is quiet and you haven’t worked in a while, an income (albeit less than what you’re used to) is much needed.
Our advice is to think carefully and to get professional advice on each contract before making your own blanket ban on all inside IR35 contracts. Even though you’ll no longer be responsible for setting the IR35 status (this will lie with the end-client), you may be able to work with the client to increase the chances that the correct IR35 determination is applied to the contract.
Before doing this, you’ll need to be clear on what you believe your status to be in relation to the contract. We therefore highly recommend that you get an independent contract review carried out prior to discussing with your client. A contractor accountant such as SG will be able to carry this out for you (at SG, this is all part of our monthly service).
IR35 reviews – what’s involved
In brief, when determining the IR35 status of a contract, we would look at your contract, terms of employment and working practices. If these are aligned to how an employee works rather than an independent contractor, then it would be deemed that the contract places you inside IR35.
The main areas that will be taken into consideration when determining your IR35 status are:
Control: what extent are you under the direct control and supervision of the end client?
Substitution: can you provide a substitute if you’re unable to perform the contract duties?
Mutuality of Obligation: when the fixed contract term has finished, is there a reasonable expectation that the contract will be extended?
If following the review, it’s our opinion that you’re placed inside IR35, we’ll suggest changes that may help to place you outside of IR35 and support you in discussing and agreeing these changes with your client. SG Accounting clients who do need to work through an umbrella company for a specific contract can use SG Umbrella at no additional charge.
While some accountants and agencies charge extra for this service, here at SG all our inclusive monthly accounting packages include free IR35 reviews.
We understand that you may have questions and concerns about the upcoming private sector IR35 changes. As well as our ‘IR35 survival guide’, you’ll find articles on our blog offering advice on different aspects of the change.
Alternatively, if you’d like to speak to an expert, contact us on 01932 867550, or send us a message and we’ll arrange a suitable time to speak.