In The Public Sector

If your business provides services in the public sector and you are concerned about the IR35 changes in 2017 get in contact with us. In April 2017 the liability for falling foul of IR35 in the public sector shifts from the personal service company to the company that contracts with the personal service company i.e. the agency or the client. This poses a significant risk to companies operating in that sector and it is magnified by the fact that HMRC have set up a specialist IR35 intermediaries unit along with recruiting an additional 1000 case workers.

Whether you an agency that supplies individuals to the public sector or a consultancy business that engages limited company contractors, it is now imperative that you fully consider your exposure to IR35 and ensure that you will not be saddled with liabilities. Marble are happy to consider how your business operates and look at ways of providing you with certainty over IR35 compliance. We are well placed to provide such assistance and suitable ways of working as the owners of Marble also operate a tax and legal consultancy practice and have extensive experience of IR35. Dave Smith for example was the first person to successfully defend an IR35 enquiry at the tax tribunals and has had an excellent track record since and went on to write a series of books about IR35 defence strategies.

HMRC do have an online tool to aid companies when considering IR35 but the tool is only for assistance and if the tool suggests IR35 that may not necessarily be the case as the courts will look at IR35 on a case by case basis and the tool is merely and indicator for HMRC.

Public sector organisations have a obligation to provide confirmation about whether a contractor is working within IR35 or not. This is somewhat helpful but given the time it would take to consider each case it is often seen that they will provide a generic response about IR35 and that would often be that it applies (as this is a cautious approach which provides protection for the public sector). This can lead to unwarranted shifts over to PAYE and can lead to contractors pay being significantly reduced.

It is poor form for a public sector body to confirm an individual is working as an employee but that they are not entitled to any of the rights or benefits that go with it. It will be interesting to see what a tribunal would make of such a situation where a public sector body has confirmed they are working like an employee and yet denying them employment rights.

Although it would prove persuasive, agencies and consultancy practices are not however bound by the opinion of the public sector body issuing that opinion and should form their own opinion as to whether IR35 applies.

If you are concerned about the implications of the IR35 changes in the public sector, please get in contact to discuss how we can help.