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Public Sector Contracting
From April 6th 2017, IR35 status for Public Sector Contracting will be determined by the client, not the contractor.
As the clients or agencies will become liable if they make the wrong determination, it is thought that they are more likely to take a risk-averse approach and decide to apply IR35.
If the client does decide that IR35 applies, the contractor company will be taxed at source, exactly as if it were an employee.
Although contractors impacted by this measure may have to pay tax like an employee, their employment status will not change, so they will not receive the rights and benefits that go with employment.
The Employment Status Service (ESS) from HMRC is designed to test whether an engagement is inside or outside IR35, and it is thought that public sector organisations will use the results of the ESS to make an assessment of a contractor’s IR35 status.
For your information we have put together a comprehensive set of guides on Public Sector Contracting below and you can check back here for updates. You can also have a look at what the contractors and industry experts are saying about it in our Public Sector Contracting Forum.