Q. I’m hoping you can help. As you will be well aware new off-payroll rules will come into effect in April for contractors operating within the public sector. I am a contractor operating my own Limited company engaged through an employment agency. I send a timesheet to the end client who in turn sends it to the agency who then pay me. My contact is with the agency and they in turn I imagine have a contract with the public sector body.
As I understand it from your article ‘Off Payroll Rules Have Landed‘ even though I do not have a direct contract with a public sector body I am still liable to the new IR35 rules given that the employment agency has a contract with them. I will also, I’d imagine, be caught by the rules governing supervision, direction and control despite an independent 3rd party review of my contract.
My question is what in your opinion would be the interpretation of the new rules for a contractor seconded into a public sector role by private company.
For example a private sector consultancy engages the services of a limited company contractor and a contract is drawn up between them to fulfil a distinct project. That private sector company then places the contractor in to offices of the public sector body to complete the project again being subject to supervision, direction and control. Do the new rules apply?
A. You are correct in stating that the rules will apply regardless of whether the contract is direct or through an agency. It means the agency would become your ‘employer’ for tax purposes if you were inside IR35 from April 2017.
It is also worth pointing out that the determining factors around IR35 will not change. Control – whilst very important – is only part of the picture when assessing your status and other issues such as personal service and mutuality of obligation still need to be taken into account.
Your point on working through a consultancy model is very much dependent on how the project is defined and delivered. If a consultancy is delivering a specific project and using resources of it’s choosing to complete the work, the likelihood is that they would be defined as the ‘end client’ of their workers – therefore meaning the engagement would not be considered as within the public sector. If they were essentially supplying staff to fill roles at the public sector client, however, this would fall under the scope of the new rules.