Contractors new tax liability?

Since the introduction of the new IR35 public sector rules in April, our tax specialist department have noticed that agencies have been quick to amend their contract wordings.   As a result, more clauses have appeared intending to pass on the liability to the contractors Personal Service Company (PSC) for the payment of tax and NICs.

Contractors now have potential exposure to the off payroll rules which all make the contractors limited company liable for any taxes for which the agency might be initially deemed liable.

It’s the off payroll clauses for public sector engagements that our tax specialist informed us about.  The requirement in the public sector for making the IR35 decision rests with the public sector body. Where there is an agency (or more than one agency) in the contractual chain, unless the body has failed to take reasonable care in arriving at its decision, it is the ‘fee-payer’ agency – the one closest to the PSC, which has the liability for any errors. That might seem unfair, but don’t be surprised that the agency includes ‘off payroll’ clauses to pass the liability on.

If you’re unsure about your IR35 position, you can take advantage of our current contract review offer. Our Tax Specialist department do a comprehensive review of the contractual terms, along with suggestions for improvement, as well as the working practices.

If you are interested in this offer please do not hesitate to contact us or ring us on 01229 813388