Background
Brookson Legal Services were approached by a large Private Sector engineering business to help it to understand the application of the 2017 Public Sector IR35 legislation, in comparison to the current (unchanged) Private Sector legislation changes, and help it to prepare for changes to the law planned for 2021.
Our IR35 Review
Brookson Legal Services reviewed the appropriate contract terms in place between our client and the end engager, as well as the terms in place with recruitment businesses and between recruiters and personal service company contractors.
This review included day to day working practices to understand whether the contract terms carried through to what happened on the ground and specifically applied both items to the engagement of one of its contractors.
The combination of these items were intended to confirm whether our client was required to make PAYE deductions at source, if the 2017 Public Sector legislation applied to the engagement, and how best to prepare for any Private Sector changes in 2021.
Brookson Legal Services was able to establish that a composite service was being provided in this instance. This meant that our client had control and responsibility over the services being provided and was ultimately required to provide its Public Sector end user client with a usable product as the ultimate deliverable under the terms of its contract.
CONCLUSION
As a result, Brookson Legal Services’ client was therefore not operating as a recruitment business supplying labour under the control of their end user client which meant that the Private Sector IR35 legislation applied. This in turn had 3 consequences:
- Brookson Legal Services’ client was not obliged to deduct PAYE from payments made to the contractor if caught by the current IR35 legislation;
- Neither Brookson Legal Services’ client, nor the end user, held any liability in relation to the contractor under the current IR35 legislation;
- The contractor remained responsible for determining his own IR35 status until 2021, but some adjustments were highlighted which could ensure that all parties continued to comply with the legislation up to, and beyond, 2021.
By ensuring that neither Brookson Legal Services’ client, nor the end client, were liable for the application of IR35, our client has time to put appropriate infrastructure in place to manage the contractor’s engagement and expectations around future IR35 changes and budget appropriately for forthcoming projects.
Following changes implemented in the Public Sector, Brookson Legal have developed IR35 solutions for both companies hiring contractors and the recruiters placing them into roles to help them navigate the changes and mitigate the associated risks to their business. For more information, contact Brookson Legal today.