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IR35 Fact Sheet - Clients Issue 1

IR35 Fact Sheet - Working Practices Issue 1

IR35 Fact Sheet - SDS Issue 1

FAQs

Are NES forcing all their contractors to go inside IR35?

The End-Client is the party responsible and liable for providing an accurate Status Determination Statement (SDS) for each Assignment, which will determine whether the role is Inside or Outside IR35. When NES receives the SDS from the End-Client, we run a ‘sanity check’ to ensure that it reflects the actual assignment conditions. 

Are NES going to accept blanket determinations of ‘Outside IR35’?

Each Assignment will require an accurate SDS from the End-Client. When NES receives the SDS from the End-Client, we run a ‘sanity check’ to ensure that it reflects the actual assignment conditions. If we suspect that the Assignment is potentially ‘Inside IR35’ instead, we will discuss this with the Client to ensure we have been provided all the necessary and accurate information.

What is the CEST Tool?

HMRC’s CEST (Check Employment Status for Tax) Tool is a service to find out if a worker on a specific engagement should be classed as employed or self-employed for tax purposes. Please see: https://www.gov.uk/guidance/check-employment-status-for-tax

Are others using the same tool?

The CEST Tool is the only tool that provides a determination result that HMRC will stand by as long as it reflects the actual or expected working practices. Some others may use their own or another company’s tool, but HMRC is more likely to dispute the results.

GDPR?

NES has compliant GDPR and data security processes.

Who is the End-Client / End-User?

The End-Client is the Client who is using the services of a worker. NES are not the End-Client or End-User.

Who is the fee-payer?

The fee-payer is the entity that pays the Contractor’s invoice. In most cases it will be the agency the Contractor contracts with (which may be NES).

What does the Status Determination look like?

If Clients prevail of NES’s value added service, NES will obtain information from the Client, then send them a ‘Draft SDS’ containing: 1) a template Letter to be completed and sent to the supply chain; 2) a pdf of the completed Client Questionnaire, and 3) a pdf of the CEST Tool result including all questions and answers leading to that determination.

Disagreement process

HMRC have not yet finalised the disagreement process, but once it has done so, NES will be compliant with it.

When will Contractors get determinations on current Assignments (starting pre-06 April 2020)?

It depends on individual Clients. Some Clients have been working on this for several months and are expected to start issuing determinations in January 2020, while other Clients are going to start working on this in January and are expected to start issuing determinations in March 2020.

When will Contractors get determinations on new Assignments (starting post-06 April 2020)?

NES anticipates that a Preliminary Draft SDS will be available when NES advertise the Vacancy, as long as the Client releases that information to us at that point in time. Otherwise, Contractors will receive determinations once the Client has created and/or approved the Final SDS.

What happens if a Role is determined to be ‘Inside IR35’?

If a Role is determined to be subject to the Off-Payroll Working Rules (i.e. Inside IR35), the working practices of the Contractor will not change this determination. Contractors can, however, decide whether to go PAYE, go via an Umbrella company, or stay PSC but ‘deemed employed’. In this latter case, from 06 April 2020, NES would pay them as though they were PAYE. Once the Contractor receives the final SDS from the End-Client, they have the opportunity to raise a dispute, but only if they have sufficient and compelling evidence to support their dispute.

Retrospective investigations?

The comment from HMRC is – “HMRC have taken the decision that they will only use information resulting from these changes (reform to the new rules) to open a new enquiry into earlier years if there is reason to suspect fraud or criminal behaviour.” https://www.gov.uk/government/publications/hmrc-issue-briefing-reform-of-off-payroll-working-rules/hmrc-issue-briefing-reform-of-off-payroll-working-rules

What happens if the PSC already has a Status Determination for their Assignment?

The updated legislation states that from 06 April 2020 the End-Client must produce a determination, so an assessment and SDS would still need to be made.

Can a Contractor change their engagement type now?

If a Contractor is considering changing their engagement type, they should raise this with NES.

What happens if a Role is determined to be ‘Outside IR35’?

When we advertise vacancies we will confirm that an SDS exists saying it is an Outside IR35 role (if the Client has already provided this information), however the Final determination will also be dependent on whether the Contractor has working practices that reflect being genuinely in business on own account. If they do then the Assignment will be Outside, or if they don’t then the Assignment will be considered to be Inside.

Will the Status Determination have any direct cost?

Some Clients may decide to charge for each assessment, and may pass down the cost to the Contractor.

What is a Client Consultation Meeting?

NES can assist you with understanding the SDS outcome for your prospective Roles or actual Assignments. At the first ‘Consultation Meeting’ with your IR35 stakeholders, NES will offer support in the following critical areas:

  • Conducting the “Initial SDS” helps understand your business’ risk exposure prior to April 2020. This will enable NES to understand your business practices and how you interact on a day to day basis with contractors;
  • Develop your understanding of the potential financial implications to your business of these changes to IR35 (for illustrative purposes only, financial impact on the independent contractor if they are deemed Inside IR35 and then the potential additional cost to your business for any contractor deemed Inside IR35.);
  • Identify opportunities for changes to your business’ working practices and the interactions on a day to day basis with the independent contractors that your business uses, where such change to working practices may support a determination that the Assignment is Outside IR35.

Drawing on our extensive experience in the UK contracting market NES has developed specific service offerings that are designed to support your business needs during the forthcoming transitional period. We offer;

  • Full analysis and review of all current agency and non-agency contractors;
  • Advise and assist on implementation for change management elements within your business;
  • Create and communicate any required policy, contracts or documentation to all stakeholders;
  • Implement and manage a full IR35 programme plan pre & post April 2020;
  • Migration of existing contractor base for continued central management (within the aforementioned programme);
  • Holistic work force solution services combatting contractor attrition.

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