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Introduction
You may be aware that changes to the ‘off payroll working rules legislation’ (IR35) is coming into effect in April 2021 for the private sector.
If your organisation deals with Autotech Recruit PSC contractors, we hope you will be interested to know how any upcoming changes to the off-payroll working rules may affect the way we currently work with you.
In this article, we are providing some information and support that will help you prepare for the changes.
What are off-payroll working rules?
The ‘off-payroll working rules’ make sure that individuals working like employees but through their own personal service company (PSC), pay broadly the same income tax and National Insurance Contributions (NICs) as individuals who are directly employed.
Autotech Recruit contractors are not comparable to employees and work under their own merit via their PSC company. This article will explain what we need to action to ensure this can stay the same going forward.
There are some important changes to these rules from 6 April 2021.
What changes in April 2021?
From 6 April 2021, medium-sized and large organisations within the private sector will be responsible for deciding the employment status for tax purposes for contractors providing services to them. Currently, individual contractors are responsible for making this decision, however, that is changing in April, and it will be the responsibility of the end client to make this decision.
A medium- sized and large organisation is considered as having two or more of the below conditions:
- an annual turnover of more than 10. 2 million
- a balance sheet total of more than 5. 1 million
- more than 50 employees
This is where it will affect you, our client and we will require you to take some action.
If your business is under this threshold and two or more conditions do not apply, please reply to this email or email ir35queries@autotechrecruit.co.uk to tell us and we do not need to go any further. Your Autotech Recruit contractor supply will remain the same.
How will this work in practice?
Where contractors are working through their own limited business, which is roughly half of the Autotech Recruit contract workforce, then the client must provide a Status Determination Statement (SDS) which states their employment status for tax purposes, as well as the reasons behind that determination.
HMRC has created the CEST tool to help individuals and organisations decide if an individual contractor should be treated as employed or self-employed for tax purposes.
We have enclosed a CEST assessment on our contractors that we have completed ourselves for your review. This was created via the following link https://www.gov.uk/guidance/check-employment-status-for-tax and we have completed it from the perspective of you, the client.
This is the tool we require you to run yourself, answering the questions regarding Autotech Recruit contractors, and advise us of your result. Without you doing this and advising the results by signing the SDS forms enclosed, we will not be able to provide you with contractors after 6th April 2021.
We have had our three main job roles which are provided to our client base (MOT Tester, Vehicle Technician and MOT Tester/ Technician) independently audited and assessed, of which I have enclosed a copy of the CEST assessment tool results for you to view, and we request that you do the same assessment and advise us of your result.
What do I need to do?
We must prepare in advance to make sure the supply of contractors into your business is not affected.
Limited contractors make up half of the contract work force available to you, therefore, if you assess our contractors differently to how we have assessed them as outside IR35 and you deem our contractors as inside IR35, there is a risk that the supply of contractors available to you could be halved, making it very difficult to cover any future bookings.
Our IR35 pack includes our Status Determination Statement forms that we would require to be read and sign once you have done your own CEST assessment and determined if you deem Autotech Recruit contractors as falling inside or outside IR35.
If this is not under your authority, I politely request that this is directed to the person within your organisation who is ultimately responsible for IR35 (This tends to be either the HR Director, Finance Director or Head of Tax).
As a piece of background, we have a confirmation from HMRC (confirmation available upon request) that all Autotech Recruit MOT testers do not fall under the SDC ruling, which makes up part of the IR35 status determination, although there are many other factors that fall into making an IR35 status determination.
Unfortunately, if we do not receive the required documentation back before the deadline, we may be unable to fulfil bookings after the 6th April. However, we will contact you before any booking is cancelled.
Thank you in advance for your assistance with the above, and please don't hesitate to contact either Faye Drage or Lee Parr from our IR35 Team on 01234 240503 or email them on ir35queries@autotechrecruit.co.uk if you require any clarification on the information attached or next steps.
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