STORM IN A TEACUP
JLR along with GlaxoSmithKline, HSBC and Tesco Bank have succeeded in shooting themselves in the foot with a blanket decision to preclude independent contractors from their workforce. JLR in particular fall foul of their own previous staffing decisions. Nothing has changed in the fundamental issues surrounding IR35 (since George Brown introduced it in 1999). The core principles of Master and Slave, Supervision and Control, Substitution and Mutual Obligation etc. have not changed in twenty years; with that in mind JLR staffed their R&D departments with short term contractors supplying skills for improvements to their range of vehicles, using undergraduates operating through their own Limited Companies. Applying a blanket decision to the status of the contractor now, prompted by the simple change, as to who should determine the status of the contractor, is in itself an admission that their previous decision was both flawed and erroneous. Remember nothing has changed within the IR35.
Best Connection and Staffline have also elected to take a blanket decision on all contractors, this decision is further underlined by all recruitment agencies being required to file monthly returns as part of the ITEPA 2003, revised in 2014, whereby each contractor has to be assessed as to their specific SDC (Supervision Direction and Control) if control is evident they are entered into their PAYE payroll, if no control exists they may be entered on the return as administering their own tax affairs. With the change, as to who determines the status of the contractor, placing all contractors upon their payroll or disguised employment using an Umbrella facility, again is an admission that the previous returns were flawed or erroneous.
THE FACTS
Each contractor must be assessed using an SDS (Status Determination Statement) upon review of the SDS the end user or intermediary reviews the information and has a clear defined choice as to whether the contractor is inside or outside of IR35. This decision can be appealed in a time frame of 45 days, whereby the contractor will provide additional evidence of their taxable status. HMRC have been portrayed as the ogre in this arrangement, left holding the poison chalice. I disagree, at the February consultation meeting HMRC stated that only 10% of contractors would fall foul of the new arrangements, having Limited Companies with no payroll, no accounting supervision and no compliance, using it a only as a vehicle for tax avoidance. These being the target for the change in legislation.
A clear advantage could be made of this legislation, a dynamic confident recruitment agency could ask their legal department (not their accountant) to confirm the above, having exercised due diligence to determine the status of the contractor they would not be liable for tax or NIC, but will be able to provide professional contractors to an ever expanding market where Best Connection and Staffline will struggle.
We provide comprehensive SDS’s for all our clients.
