From 6 April 2021, the responsibility for deciding whether off-payroll working (IR35) rules apply moved from the personal service company to the hiring company.

The rules only apply to UK private sector companies that qualify as not small – that is if your company meets 2 or more of the following conditions:

• has annual turnover of more than £10.2 million.
• has total assets of more than £5.1 million before deducting any liabilities.
• has more than 50 employees.

If your company qualifies as not small, then from 6 April 2021 your company must decide the employment status of every contractor who operates though a personal service company.  The conclusion and the reasons for coming to it must then be communicated to the contractor through a Status Determination Statement.

Reasonable care must be taken when making the determination and failure to do so will result in the contractor’s Income Tax and National Insurance becoming your responsibility. Making blanket decisions without giving due thought to each contractor’s circumstances would not constitute as reasonable care.

If a contractor disagrees with your determination, then you have 45 days from the date they informed you to respond with a decision on whether to maintain or change your determination after considering their reasons for disagreeing.  Failure to respond within 45 days will result in the contractor’s Income Tax and National Insurance becoming your responsibility.

It is your responsibility to ensure that you keep records of all your Status Determination Statements including the reasons in coming to your conclusion, have a process in place to deal with any disagreements and to re-evaluate a contractor’s determination if their circumstances change.

If you require advice on the rules around IR35 or would like support on how to make a determination, then please talk to Barnes Roffe today.