Introduction and Key Terms
New IR35 legislation is due to be applied to the Public Sector
(only) in April 2017.
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
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
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
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 -
Following discussions, we have put together a PSL of 'umbrella'
firms, all full members of the FCSA, as follows:-
Giant - www.giantgroup.com -
firstname.lastname@example.org - 0330 024 0946
Orange Genie - www.orangegenie.com -
email@example.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.
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
More payment and recruitment solutions will be listed here as
they become known.