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The IR35 Knowledge Series | Part 2 - How do I Determine an Individuals Employment Status?

  • Publish Date: Posted about 2 years ago
  • Author: Rebekah Valero-Lee

​IR35 was introduced with the intention of ensuring that where individuals are operating via a personal service company (PSC), they were paying the correct levels of income tax and national insurance, relative to their employment status. The basis of the legislation is to assess the nature of the direct relationship between the end client and worker (effectively removing any intermediaries).

From April 2020, the responsibility for confirming the IR35 status of an individual will move from the PSC to the end client. The end client will need to demonstrate that “reasonable care” has been taken when making the decision.

How do I decide whether an individual is inside or outside of IR35?

The considerations as to whether the individual may fall ‘inside’ or 'outside’ of IR35 include, but are not limited to, the following: -

To what extent (if any) the end-client exercises supervision, direction or control over how and when the work is performed by the individual supplied through the PSC.

Whether there is a right to substitution under which the PSC can provide a substitute to carry out the work (subject in some cases to end-client approval).

Whether there is mutuality of obligation, i.e. does the PSC/individual have to accept work offered by the end-client (whether directly or through an agency) which the end-client is obliged to offer to the individual/PSC (not a factor considered under the CEST).

The way in which payment is made for the services.

Whether the individual provides their own equipment and/or materials.

Whether the individual is subject to any procedures or processes also applicable to employees of the end-client.

Whether the individual receives any 'employee-type' benefits.

“It is important to remember that no single factor will determine why a contractor is out of or inside scope. You must adopt a multi factorial approach when reviewing each employment status case” – Pili Fernandez-Mahoney, Weightmans LLP

As the 2020 deadline approaches this guide has been created to help you navigate the changes that may impact your business. Recordings and commentary from our latest IR35 forum give insight into:

How to avoid costly legal challenges

Ensuring your contracts are compliant

Reducing the numbers of contractors that leave your organisation

Liaising with your contractor population to provide a consistent message.

Getting equipped with the right tools and partners to compliantly support your organisation and contractor workforce

The e-book concludes with questions put to the panel by end clients who operate in the private sector. Their questions, and the answers provided, give a real insight into the queries and concerns of business professionals who will be directly affected by IR35.

In our role as a specialist recruitment provider, Morson has the appropriate expertise to assist you to ensure your business is compliant with any changes to IR35 and can support you with your full review of the contractual workforce.

This guide has insights from Morson in-house compliance expert, Phil Beardwood, and our partners Champion Contractors and Weightmans LLP who specialises in dealing with agency/IR35 matters and are fully up-to-date with the intended changes in the Private Sector. Download your copy or contact for more information.