The government have released a Procurement Policy Note following their review of ‘Tax Arrangements of Public Appointees’ confirming the arrangements for contractors working within the public sector.
The publication from the Cabinet Office confirms that public sector contractors and workers who are off payroll face strict new regulations which will mean they are obliged to provide evidence of their IR35 status if they are engaged in a public sector contract. The regulations relating to the correct payment of tax will have more of an impact on senior ‘controlling persons’ and contracts lasting more than six months and costing over £220 a day.
Although many contractor and recruiter groups have expressed their concern about the impact this will have on contractors, the proposals were implemented on August 23rd, following the outcomes of the review published on May 23rd.
The PCG have also released guidance for public sector contractors following the review, issuing advice for those who are worried about their IR35 status. They have suggested a number of options for contractors who want to check their status without using HMRC’s own contract review service.
The first recommendation was for contractors to self assess their contract using the HMRC business entity tests; this set of questions covers a number of aspects to give a risk score for contractors. As these tests as independent, contractors are not obliged to declare their score to HMRC.
For those who receive a medium or high risk score, the PCG recommend that they then get their contract review by a reputable specialist, such as ICS, who can provide advice about whether a contract is likely to be inside or outside IR35. This review can usually be provided as an acceptable assurance to employers regarding IR35 status.
ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation. You can contact us now for a tailored proposal based on your individual circumstances as a contractor and to request a full IR35 contract review.