IR35 Disguised Employees

Every day we receive a phone call from a potential freelancer asking if we can help them find their perfect freelance role. Freelancers range from Designers, Garment Technologist, Merchandisers, Product Developers, Pattern Cutters and Buyers. The first thing we need to know from them, if they are IR35 compliant, as every contractor that works through Karen Collier is subject to an IR35 review. 80% of the time, contractors have never heard of IR35 and these are people who have been running their own freelance business for years.

To gain a better understanding of IR35, we asked Karla Keeling, the Regional Manager at Thornberry, to write up an article for our clients and candidates.

Thornberry UK / Payroll and Compliance

Thornberry UK is an out-source payment provider to the UK Recruitment industry and have worked with the Karen Collier brand for many years, providing sound, robust and compliant payroll models for their contract workers.

IR35 and Ltd Co rules

IR35 was first introduced in 2000 as a mechanism to try and prevent the rise of what HMRC saw as “temporary workers” setting up limited companies [PSC’s] to benefit from certain tax advantages. Basically, IR35 is triggered if the contractor falls into the bracket of being an employee of the end user if the limited company was removed. Historically it has been up to the PSC to determine IR35 status and for HMRC to challenge the position should they feel that IR35 applies. Every contractor that works for Karen Collier is subject to an IR35 review.

https://www.gov.uk/guidance/check-employment-status-for-tax

The Criminal Finance Act 2017

From September 2017 it is essential that all recruiters can demonstrate that they have taken due care over the selection of their payment partners. Failure to do this and the identification of tax losses by HMRC could lead to tax evasion charges. The Criminal Finances Act 2017 will make companies and partnerships criminally liable if they fail to prevent tax evasion by either a member of their staff or an external agent, even where the business was not involved in the act or was unaware of it.

https://www.gov.uk/government/organisations/hm-revenue-customs

Why Karen Collier use an out-source payment provider

Legislation in the world of contracting can be a mine field for an agency. Thornberry UK only use compliant, PAYE models and take care of all the relevant deductions to be paid to HMRC, as well as the extensive reporting requirements. Some of the benefits included in Thornberry’s service are elevated rate of pay to cover deductions, reduced Employers NI cost as payroll company can apply Tax relief, employment rights from day one and holiday pay paid each week in your take home salary.

http://www.thornberryuk.com