This article is the third entry in Qubix's 'Countdown to IR35' blog series running up to the April 2020 deadline (recap on the first entry here). The purpose of this blog is to support our clients that may be affected by the new employment tax changes in the private sector. Providing key updates, insights and solutions as we work together toward the IR35 rule changes so that informed, accurate status decisions are made to protect all parties involved.
Countdown to IR35: post-webcast speaker insights
Qubix hosted a webcast earlier this week discussing in-depth the changes to off-payroll working rules. You can watch a recording of this webcast here. This blog will outline some of the key insights and explore, in specific detail, the 'consultancy carve-out'.
- If the end-user decides the assignment is 'inside' IR35, they will be paid with employment taxes deducted.
- If they have that pay paid using their original PSC, then they'll be suffering employment taxes and relevant accountancy fees without receiving any employment rights.
- For some contractors, if their assignment is 'inside' they'll be tempted to work through a PAYE or umbrella instead.
In the long-run:
- If contractors see all their future assignments inside IR35, then it may make sense to close their PSC.
- They must take individual advice to ensure they don't make mistakes that are bad for taxation purposes.
- They may well find end users gradually change their approach to what kind of assignments can be inside or outside IR35.
- If an end-client is prepared to accept a PSC or other intermediary in the supply chain, they must issue a Status Determination Statement (SDS) for each assignment, or they remain liable for employment taxes.
- They must also deal with disputes involving contractors and agencies or will again remain liable.
- Some end-clients will have decided to ban PSCs.
In the long run:
- End-clients that decide to ban PSCs will have a smaller talent pool from which to obtain work and will have to pay more for the same resource (some contractors will not accept inside roles).
- The new rules apply to supplies of labour through supply chains.
- Where 'whole services' are outsourced, the outsourcing business not the original end-client, becomes the end user.
- This enables the outsourcing business to control the working practices to ensure continuing employment status stability; and critically; protects the original end user from liability transfer.
- We can provide lower-cost solution compared to paying tax and national insurance as well as costs associated with acquiring talent.
- Income protection and a steady flow of work for contractors
- Unlike an agency, Qubix is already operating as a genuine consultancy company.
- In comparison to the "Big Four" and global systems-integrators, Qubix offers unparalleled flexibility.
- We can deliver levels of business continuity.
- Managed services provider for critical and time-sensitive BAU support roles.
If you're interested in how Qubix can help your organisation with the changes to IR35, why not watch the recording of our webcast featuring subject matter expert Chris James, Chairman of the FCSA.
Watch recording and download slides: https://www.qubix.com/uk/webcast/ir35