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emTax’s online solution reliably meets all your new IR35 obligations

30 October 18 | By: Jas Jhooty

IR35

Budget 2018

In yesterday’s budget the Chancellor confirmed that the IR35 changes introduced into the Public Sector in 2017 will be extended into the private sector, with an as of yet undefined exclusion for small businesses, with effect from 6th April 2020.

This is major change in the status quo where previously the existing IR35 regulations only applied to the Personal Service Company (PSC) and not to the end engager. Now it is the hirer who must go through all of the employment status tests to arrive at a defensible position whether or not the PSC is caught by the new IR35 rules.

If the contract is deemed to be within IR35 then the hirer is obliged to subject presented invoices from the PSC to PAYE and NIC deductions (after VAT has been accounted for) with only the net amount remaining payable to the PSC.

CEST

The government’s Check of Employer Status Tool (CEST) that has been developed by HMRC to assist the Public Sector in determining the employment status of PSC contracts, has been roundly condemned for being inaccurate by not considering all of the relevant employment status test cases. This often leads to an incorrect employment status result, most often skewed towards an employed status. Therefore CEST cannot be relied upon if you are looking towards minimising the additional 13.8% employer’s Class 1 NIC impact to your business.

emTax’s IR35 testing tool

We have partnered with Contractor Calculator to offer a much more reliable online IR35 testing solution consisting of a 15 minute assessment to be completed by your suppliers, that can assist you in pinpointing:

  • the exact number of PSCs who can continue to be safely paid gross – IR35 pass
  • those for whom PAYE & NIC deductions would have to apply – IR35 fail
  • and the proportion of PSCS that fall in between these two positions – IR35 borderline pass/fail

These results will be presented to you on an online dashboard showing an analysis of:

  • Number of tests taken
  • Number of passes/fails
  • Distribution of IR35 risk across a 19-point scale
  • Identify specific case law areas where there is business-wide tax risk
  • Calculations of the potential tax risk
  • Any other bespoke reports/data mining requests

After this analysis we also offer an IR35 repair service that will look into amending the contracts and working conditions of the borderline pass/fail results to favour an IR35 pass the next time the assessment is made.

All assessments made can be backed up by a 28 page due diligence report that details how you have arrived at the correct employment status for the PSC, thus safeguarding you at the time of any future HMRC enquiry.

How emTax can help

Our IR35 testing tool has been tried and tested extensively within the Public Sector. We can now offer this proven technology into the Private Sector to assist you in meeting your new IR35 obligations efficiently and accurately with the added bonus of minimising the potential increases in your underlying employer’s Class 1 NIC costs.

To find out more please contact us by email at enquiries@emtax.co.uk or by telephone on 0345 548 3680.

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