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Introduction and Key Terms

New IR35 legislation is due to be applied to the Public Sector (only) in April 2017.

https://www.gov.uk/government/consultations/off-payroll-working-in-the-public-sector-reform-of-the-intermediaries-legislation

E&OE

Nationwide People Limited will not be held liable for the results of any actions you may take as a consequence of reading the following. Interested parties are encouraged to take their own professional advice.

Please note that until the new IR35 legislation is in force our response to this continues to be "work in progress" and will be developed further as we settle on a conclusion regarding our policy and processes going forward. We are currently consulting with a variety of legal and financial specialists, whilst taking to clients and contractors that could be affected.

In response to queries arising we have put together some key points to note, and we will continue to update the information provided as more becomes clear. You may wish to bookmark this page and check-back from time-to-time. We wish to offer a consistent message to everyone so it is possible you have been directed here by someone at Nationwide People in response to your questions.

There are two main issues to deal with (1) an increase in tax deductions should a public sector contract assignment fall within IR35 and the contractor(s) also operate a Personal Service Company and (2) tax withholding liability and process, including the timing of tax deductions and reporting to HMRC should the above apply.

Here are some key terms commonly used…

"PSC" - Personal Service (Limited) Company.

"Umbrella" - (accountancy) firm offering payroll and tax withholding services to contractors.

"Digital Tool" - online tool to be supplied by HMRC for assessment of IR35 status.

"FCSA" - The Freelancer & Contractor Services Association - www.fcsa.org.uk

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Following discussions, we have put together a PSL of 'umbrella' firms, all full members of the FCSA, as follows:-

Giant - www.giantgroup.com - enquiries@giantgroup.com - 0330 024 0946

Orange Genie - www.orangegenie.com - www.charlotte.voisey@orangegenie.com - 01296 468 197

If considering which firm to use we suggested talking to all of them about your situation to see which you prefer. Please be advised, in offering this information to you Nationwide People Ltd is NOT offering financial advice.

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Different public sector clients have different ideas about how best to retain existing contractors and recruit new contractors in the future. However, Nationwide People is offering as much flexibility as we can with regards to payment solutions. Although not all clients are able to accept all of the methods listed below, these are being considered:-

Direct contrator engagement on the clients' own payroll where we would bill the client on a 'margin only' basis. This also reduces the clients VAT burden.

Direct contractor engagement of a PSC contractor utilising 'project deliverable' contracts that may naturally fall outside of IR35 - this is in contrast to the normal 'time and materials' basis on which contacts are written, where falling within IR35 is possibly considered more likely. Again, we would only bill the client on a 'margin only' basis.

We are 'bought-out' from an existing contract with a one-off fee paid by the client and the PSC is then engaged directly. We would have no further relationship with the PSC contractor throughout the duration of their contract. This is similar to us charging a one-off permanent recruitment fee. This applies to new recruitment too, albeit payment of the 'one-off' placement fee may be staged in-line with the duration of the contract and any extensions.

'Traditional' engagement of a contractor through an umbrella (accountancy) firm for the purposes of payroll, tax withholding, HMRC reporting and payment whilst working on a public sector contract. Our understanding is that this does NOT stop the contractor continuing to run their PSC and invoicing private sector clients they may be working for at the same time.

PSC contractor works with an umbrella (accountancy) firm that offers a payment solution  where this is possible, again just for the public sector component of any contract work they may be doing. This allows the contrator to continue to use their PSC for all the work they may do, whilst being compliant regarding tax withholding and HMRC reporting. This does not appear to be a common offering from umbrella firms. GIANT do offer this however.

** If your are already working 'on payroll', via an umbrella (accountancy) firm then there is no change required on your part when the new IR35 legislation applies in April 2017 - your tax withholding, payments and HMRC reporting should already be dealt with. **

More payment and recruitment solutions will be listed here as they become known.

 

 

 

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