IR35 was first introduced in 2000 with the aim of reducing tax avoidance by contractors who HMRC believe to be “disguised employees”. Essentially, this was aimed at people who work in a similar way to full-time employees but charge for their services using their limited companies to make their business as tax efficient as possible.
Currently, an individual working through their own limited company is responsible for determining their IR35 status and making deductions for tax and national insurance contributions on each contract they undertake.
However, in April 2021 the determination of IR35 status will become the responsibility of the end client or hirer and should be passed down through the supply chain (if a fee payer is in place – generally a recruitment agency) to the contractor. Tax liability will sit with the “fee payer” – the recruitment agency – who must deduct tax and national insurance contributions and report using Real Time Information (RTI).
IR35 changes will significantly impact recruitment agencies who supply workers operating through intermediaries, such as PSCs, by adding to their responsibilities and increasing liability. Therefore, it is vital recruitment agencies take steps now to prepare for IR35 changes in order to mitigate all risk and protect themselves and their contractors.
This is where Optimus Shield come in….
Optimus Shield offer a service that:
Optimus Shield is the result of heavily invested research and development to tackle the issues now facing the private sector due to changes to the IR35 legislation being rolled out in April 2021.