IR35 is a HMRC initiative which aims to put a stop to ‘disguised employees’ – i.e. “a worker that provides their services to a client through an intermediary but would be classed as an employee if they were contracted directly”.
From April 2020, it will become the responsibility of the employer (‘fee payer’) to decide whether IR35 applies or not. This switches the onus to be compliant from the contract worker to whoever is engaging them. By moving the responsibility for correctly applying IR35 to private sector employers, HMRC has also transferred any penalties for getting it wrong.
This means that employers could potentially face bills for unpaid tax and National Insurance contributions in the event that contractors are deemed to be, in effect, ‘disguised employees’ who shouldn’t be contracting at all.
As partners in the sourcing and engagement of contract staff, recruitment agencies need to ensure compliance to avoid potential fines and disturbances for themselves and their clients.
The Voyager team has been working hard behind the scenes to implement solutions to help recruitment agencies tackle the IR35 headache – right inside our market leading products: Mid-Office and Infinity.