Attempting to Influence Public Sector IR35 Decisions

Influence or Accept?

If you're working in the Public sector, the end hirer is responsible for deciding if your contract falls inside or outside IR35. This is in contrast to the Private sector, where you are responible for the decision. 

Whilst the legislation sets out a requirement for the Public Sector body to exercise “reasonable care” when making the IR35 assessment, you and your agency should ensure that a robust process is being followed and that decisions are being taken fairly.

Many Public Sector bodies fear the loss of skilled contractors and resource as a result of the new rules and are willing to have sensible conversations around the IR35 status of a particular role.

It is important when trying to influence the decision that you base your arguments on fact and provide as much supporting evidence as you can. The following steps may help you get the decision you believe is correct:

Undertake an Employment Status review using HMRC’s new tool
https://www.tax.service.gov.uk/check-employment-status-for-tax/setup
The tool has faced much criticism, but it is being used by Public Sector bodies and it is the only tool that HMRC have said they will stand by, assuming all information provided is truthful.

If your result agrees with the opinion provided by your Public Sector Body, it is probably the right time to accept the assessment and consider how best to operate. If you both believe the assignment to be outside IR35, you can continue to use your Limited Company but if you both consider the role to be inside our advice is to join Orange Genie Umbrella, at least for the duration of the contract, as take home pay in Umbrella will be greater than applying the new rules in your company.

If you disagree you may want to provide further supporting evidence. Your agency will be keen to retain you and for the contract to run, so they too may assist with providing evidence.

Use our Status Tool.

You can our status tool here. This asks a few more questions than that of HMRC and is based on previous case law history. The short questionnaire will produce a detailed report explaining where your case is strong or weak, unlike HMRC’s tool that provides no insight into the result.

A strong inside or outside result using this tool, maybe enough for you to decide that you fight the Public Sector body’s determination or accept it, especially if it agrees with the HMRC tool.But if you are not satisfied there is more you can do.

A full Contract and status review can be carried out with a specialist such as our partner Bauer & Cottrell. A review will involve more than an online tool and will allow an advisor to talk to you, your agency and perhaps end client about both contract terms and working practices.  The outcome of such a review, based on evidence pooled from many sources can prove powerful.

Despite your best efforts to “persuade” your Public Sector client that you have evidence of being “outside” IR35, the decision is for them to make and they may not agree to a re-evaluation. At this stage you and your agency have a choice.

You can choose not to accept the decision and leave your current contract. Many have done this and sought alternative work in the Private Sector to safeguard their earnings.

You and your agency can choose to disregard the assessment and continue to pay your Limited company without deducting PAYE and NIC from the payments. Ultimately this is a risk for your agency as they are responsible in the legislation for ensuring the correct taxes are deducted based on the opinion of the Public Sector body. You may be able to use all the techniques described above to influence your agency, but they will ultimately decide their own robust system with regard to this and their own attitude to risk.

You can accept the determination and consider how to operate “inside IR35”. You will at this stage be acknowledging that you will be taking home less money, either through your Limited company or by moving to an Umbrella model. We explain here why an Umbrella model is our best advice. If you do decided to switch to an Umbrella model you need to consider asking for a rate increase to ensure you protect your income.

To find out more about how Orange Genie Accountancy could help you, please call 01296 468 185 or email accountancy@orangegenie.com.

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Orange Genie Accountancy offers fixed fee accountancy packages to contractors and freelancers. Each client has unlimited access to their own dedicated approachable and friendly accountant. All Orange Genie Accountancy accountants are specialists in the contracting market, so they can give you bespoke, high quality advice.

We will always keep you informed about anything that could affect you and your company. Our relationships with our clients are extremely important to us so we'll be in touch often, whether it be face to face, over the telephone or email.

Our packages start at £75 + VAT a month for an online service. Our most popular package is £120 + VAT a month which provides you with your very own dedicated accountant as well as:

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  • Proactive contact
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  • Annual Return
  • Self-Assessment Return
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​And much more, includingaccess to wealth management advice, IR35 reviews and pensions planning. 

If you would like to appoint Orange Genie Accountancy as your accountants please either fill out our enquiry form or give one of our friendly expert accountants a call on 01296 468 185 or email accountancy@orangegenie.com

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