ENSURING THE FEE PAYER MEETS HMRCS REQUIREMENTS
Under the IR35 changes that came in 2017 and 2021, the recruitment agency is often referred to as the ‘fee payer’ as they are usually the entity closest to the contractor in the supply chain, thus making them responsible for deducting the correct TAX/ NIC from the contractor.
The fee payer won’t be responsible for IR35 but will be required to complete additional tasks:
Ensure contractor is paid correctly: If a role is determined inside IR35, it’s the fee payer’s responsibility to make the correct PAYE deductions. Getting this wrong can lead to fines and penalties.
Even though the fee payer is not responsible for making the IR35 determination, they need to ensure they are happy with the assessment that’s made. This is in the interest of them and the contractor as it ensures the contractor is not subject to unnecessary tax deductions/is not paying enough tax. If the fee payer disagrees with the hirer’s SDS they can submit a challenge in the same way the contractor can.
Many recruiters will not have the required expertise to meet their fee payer requirements or have sufficient payment models available. Therefore, finding the right partner is paramount for everyone in the supply chain.
BUSINESS SOLUTION FOR RECRUITERS
With a wealth of knowledge and dedicated IR35 experts, Brookson is on hand to ensure recruiters comply with HMRC’S requirements and take the burden away from their agency.