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Message to our clients on IR35 – myfm makes engaging interim staff easy

This information is relevant if you currently engage interim contractors via myfm or have done so in the past. We want to reassure you about the steps we are taking to make it easy for you to continue to do this when rules change in April on the assessment of IR35 status.

Also, feel free to share this information with others, particularly if you recommend myfm to colleagues and other organisations.

How will the IR35 rule changes affect you?

For every assignment, large and medium sized businesses will soon be responsible for making the  assessment on whether a contractor is categorised as inside IR35 or outside IR35. In other words, the government requires businesses like yours which commission work to assess whether the employment status of each individual should be employed or self-employed. The rules determining status are not changing just who is responsible for making that assessment.

myfm is proposing to carry out the IR35 assessment on your behalf

In response to this, we will make this process easier for you, our clients, by completing the IR35 assessments for our associates on your behalf.

We are planning to do this using the online government assessment tools. The reports generated will form part of the Terms of Reference for the engagement. This will help you by reducing the admin you will need to complete before engaging interim contractors.

We are confident that the majority of interim placements, by their nature, will continue to remain outside IR35 – self-employed. We have already run through this process for several of our clients and associates to ensure compliance.

If during the course of the assessment process, we find an individual assignment is assessed as inside IR35, we will liaise with you on payroll arrangements.

Your flexibility will help

We have discovered that the assessment results are based on a culmination of different factors, rather than individual question responses. Before any interim appointment, we encourage you to think about:

  • Being flexible on where and how the contractor works.
  • Measuring success through outcomes, rather than a ‘role-based’ appointment.
  • Allowing the contractor to provide their own laptop and equipment.
  • Entering into a separate agreement for each new project.
  • Requiring the contractor to put right any sub-standard work at their own cost.
  • Allowing us to send an appropriately qualified substitute, when required.

To summarise, we will:

  • Streamline the engagement process for you by carrying out the IR35 assessment on your behalf, using the information you provide.
  • Reassess an assignment on a regular basis.
  • Use the assessment report generated by the government tools as the Terms of Reference for the engagement.
  • Always seek up-to-date information from you to complete IR35 assessments.
  • In the event of a result which indicates an appointment should be inside IR35, we will liaise with you to find a solution on payroll.

 

myfm provides highly qualified and experienced interim managers and consultants to the FM industry, often at short notice. We are confident that the steps we are putting in place will enable you to continue to access this service with minimum changes, despite these new requirements on businesses.

While we are not experts in employment law or tax, from our research we believe the majority of assessments for the type of interim appointments which we make should be straightforward to assess using the government tools provided.

To talk to us about this, contact Mané Lucas, Head of Resourcing or Ashley Firmin, Head of Finance and Commercial for more information – mane.lucas@myfm.co.uk or Ashley.firmin@myfm.co.uk.

IR35 – is it the final push this time?

By Ulf Muller and the team at myfm

Remember all the fuss about getting ready for the changes in IR35 this time last year? And then, like so many other things, implementation was paused because of Covid-19. Back in April when the news was released that the new rules wouldn’t kick in for another 12 months, we seemed to have so much more to worry about and the new deadline was an age away. But as we start 2021, suddenly that new 6 April 2021 deadline is looming, so are you prepared?

If the answer is no or perhaps maybe, now is the time to get your house in order. If last year was anything to go by, your inbox will start to fill up with offers of help from accountancy firms, lawyers and consultants offering to help you unpick the complexities of IR35.

People are generally surprised when we say that the measures that we are planning at myfm, which has 200 associate contractors on the books, are largely based on the free advice and assessment tool from HMRC.

For our purposes and for our clients who have asked for our help, we haven’t yet found anything so complicated that we couldn’t resolve it using the HMRC resources. Yes, you need to be methodical and systematic in your approach, and if you are dealing with a large number of contractors this is potentially time consuming, but it really isn’t that complicated.

There is plenty of specialist advice available if you want it. But from what we can see, if an individual is a true contractor, that will remain the case. But if a hirer or individual has been using the contractor model when someone should have been classed as an employee, then things are about to change.

The way we have got our heads around this at myfm is by considering what is staying the same and what is about to change. The rules around IR35 itself are not changing, not noticeably anyway. But what is changing is that private companies, along with the public sector, will now be responsible as hirers for making the assessment on whether an individual is inside or outside IR35. They will be accountable to HMRC on that decision, and responsible for arranging for the tax and national insurance to be paid if the determination falls inside of IR35.

To start to get you thinking on this and to help bust a few of the myths, we have collated a quick guide to the high-level changes on this topic.

Who will these changes apply to?

For the first time, medium and large-sized hirers in the private sector (based on annual turnover of more than £10.2million/ balance sheet total of more than £5.1 million and/or more than 50 employees) will need to assess and communicate the employment status of individuals.

Public sector hirers already make these assessments and have been doing so for several years, this will continue – some extra responsibilities are listed in the HMRC guidance.

Small companies (those under the criteria above) are classed as exempt and when they hire, individual contractors will remain responsible for determining their own employment status.

If you are a contractor, or freelancer, providing a service to a large or medium-sized company, you should expect that company to assess whether you should be on or off payroll and notify you of the outcomes of this assessment and any implications.

What will medium and large companies be required to do from April?

For every contract agreed with an agency or worker, companies will need to decide the employment status of an individual, pass this decision to the worker and keep detailed records of reasons – the HMRC tool can help companies to do this.

They will need to have processes in place to deal with any disagreements – details of what is expected are listed in the HMRC guidance.

Individual contractors can also use the tool to make their own assessment.

Who is responsible for tax and national insurance payment?

Now this varies depending on the scenario affecting you or your organisation and is too detailed to include here. So, the best thing to do is to look closely at the HMRC guidance on this, so you can understand how the rules should be applied.

There are a few general principles to bear in mind:

  • If you are the organisation which makes the assessment on status and off-payroll working rules apply, then you will be responsible for deducting tax and national insurance from your workers’ fees and paying it to HMRC.
  • If you are an intermediary, such as an agency, you will be responsible for deducting employer National Insurance contributions from the fees for the services which your worker provides.
  • If you are a contractor and you are providing services to a small company which is exempt, then your situation will continue as is – you will continue to make the payments.

What criteria should be applied to determine status?

The HMRC assessment tool takes you through this in detail and looks at criteria such as the contract in place, substitution arrangement, the working pattern, equipment required, and the length of time services will be provided.

Next steps

If your business doesn’t work with contractors, or you are not a contractor yourself, then you don’t really need to worry about these changes. But if you are either of these things, you should be taking clear steps to prepare, so you are ready to meet your responsibilities under the new arrangements.

If you are a contractor working with private sector clients, then you should assess your own situation, using the tools provided by HMRC. If you provide services to just to small companies, you must make your own assessment. In any event, it is important that you keep lines of communication open between those commissioning work and those providing services, so that all parties fully understand who has responsibility for what.

Our advice is to start your preparation now, if you haven’t already, particularly if you are involved in hiring a large number of contractors. myfm is able to help clients but we firmly stand by our earlier remarks. Time consuming? Possibly. But are these changes to IR35 complicated? No. In most situations, it shouldn’t be daunting for companies provided they follow the advice on offer.

To find out more contact ulf.muller@myfm.co.uk.

IR35 – is this really as complicated as it sounds?

At MyFM we seem to have inboxes full of messages offering help and advice and telling us how complicated the latest changes to IR35 will be – but they really aren’t.

Naturally, we’ve been carefully studying the potential impact the IR35 changes will have on our own business and I’m sure many of you are taking steps to get your house in order ahead of the April 6 deadline.

Some people are surprised when we say that the measures that we are planning at MyFM, which at any given time has between 50 to 100 associate contractors working with FM clients, are largely based on the free advice and assessment tool from HMRC:

For our purposes and for our clients who have asked for our help, we haven’t yet found anything so complicated that we couldn’t resolve it using the HMRC resources. Yes, you need to be methodical and systematic in your approach, and if you are dealing with a large number of contractors this is potentially time consuming, but it really isn’t that complicated.

There is plenty of specialist advice available from accountancy firms, lawyers and consultants, all with varying price tags attached, if you want it. But from what we can see, if an individual is a true contractor, that will remain the case. But if a hirer or individual have been using the contractor model when someone should have been classed as an employee, then things are about to change.

The way we have got our heads around this at MyFM is by considering what is staying the same and what is about to change. The rules around IR35 itself are not changing, not noticeably anyway. But what is changing is that private companies, along with the public sector, will now be responsible as hirers for making the assessment on whether an individual is inside or outside IR35, they will be accountable to HMRC on that decision and responsible for arranging for the tax and national insurance to be paid.

To start to get you thinking on this and to help bust a few of the myths, we have collated a quick guide to the high-level changes on this topic.

Who will these changes apply to?

For the first time, medium and large-sized hirers in the private sector (based on annual turnover of more than £10.2million/ balance sheet total of more than £5.1 million and/or more than 50 employees) will need to assess and communicate the employment status of individuals.

Public sector hirers already make these assessments and have been doing so for several years, this will continue – some extra responsibilities are listed in the HMRC guidance.

Small companies (those under the criteria above) are classed as exempt and when they hire, individual contractors will remain responsible for determining their own employment status.

If you are a contractor, or freelancer, providing a service to a large or medium-sized company, you should expect that company to assess whether you should be on or off payroll and notify you of the outcomes of this assessment and any implications.

What will medium and large companies be required to do from April?

For every contract agreed with an agency or worker, companies will need to decide the employment status of an individual, pass this decision to the worker and keep detailed records of reasons – the HMRC tool can help companies to do this.

They will need to have processes in place to deal with any disagreements – details of what is expected are listed in the HMRC guidance.

Individual contractors can also use the tool to make their own assessment.

Who is responsible for tax and national insurance payment?

Now this varies depending on the scenario affecting you or your organisation and is too detailed to include in a blog. So, the best thing to do is to look closely at the HMRC guidance on this, so you can understand how the rules should be applied – https://www.gov.uk/topic/business-tax/ir35

There are a few general principles to bear in mind:

  • If you are the organisation which makes the assessment on status and off-payroll working rules apply, then you will be responsible for deducting tax and national insurance from your workers’ fees and paying it to HMRC.
  • If you are an intermediary, such as an agency, you will be responsible for deducting employer National Insurance contributions from the fees for the services which your worker provides.
  • If you are a contractor and you are providing services to a small company which is exempt, then your situation will continue as is – you will continue to make the payments.

What criteria should be applied to determine status?

The HMRC assessment tool takes you through this in detail and looks at criteria such as the contract in place, substitution arrangement, the working pattern, equipment required, and the length of time services will be provided.

Next steps

If your business doesn’t work with contractors, or you are not a contractor yourself, then you don’t really need to worry about these changes. But if you are either of these things, you should be taking clear steps to prepare, so you are ready to meet your responsibilities under the new arrangements.

If you are a contractor working with private sector clients, then you should assess your own situation, using the tools provided by HMRC. If you provide services to just to small companies, you must make your own assessment. In any event, it is important that you keep lines of communication open between those commissioning work and those providing services, so that all parties fully understand who has responsibility for what.

Our advice is to start your preparation now, if you haven’t already, particularly if you are involved in hiring a large number of contractors. MyFM is able to help clients but we firmly stand by our earlier remarks. Time consuming? Possibly. But are these changes to IR35 complicated? No. In most situations, it shouldn’t be daunting for companies provided they follow the advice on offer.