The banks that like to say 'No'

Welcome to the first of our topical articles. We all know there is a difference between an employee and a sub-contractor, but for those supplying services to larger clients, now is the time to focus on IR35. You would think that common sense would prevail and that the same tests would apply under both tax law and employment law. Broadly, perhaps, but there are some differences. Changes will apply from April, so now is a sensible time to review the status of each self employed person who works with you.

In practical terms, this means a review of the main test headlines - and there are quite a few to look at (use a matrix for ease), which we group as follows: (1) in business on their own account versus inclusion in your organisation, (2) the degree to which their work or tasks are controlled, (3) substitution of another person for themselves, (4) who pays to correct work, (5) the basis on which they are paid, limited company or proof of HMRC self-employed registration, (6) having multiple clients, (7) where they work, (8) what tools/equipment they supply, (9) the obligations on either party to provide or accept work and finally (10) the terms of any written contract between you.

Watch out for the last point – you cannot rely on a written ‘self-employed contract for services’ if the other tests point towards employment. That would be like sticking a label on an orange saying “this is a banana”…