Recent legislative changes surrounding the status of workers is wreaking havoc for some recruiters.
We are in an age of continually contending with more and more red tape and the introduction of Onshore Intermediaries Legislation attacking false self employment is adding to the burden, especially when combined with some subtle amendments to the existing IR35 regulations.
HM Revenue and Customs (HMRC) are seeking ways in which to increase the tax take through maximising the number of workers within employment and these legislative changes are a step towards achieving that goal.
Under these new rules, a recruiter is responsible for determining the employment status of a worker by following one test which assesses the powers of supervision, direction and control.
In other words, now that the substitution and mutuality of obligation tests within IR35 carry less weight, the control of the worker and the right to direct the worker become the key employment tests.
It is the latter point (those that can direct) that is causing most concern for agencies and their customers. In instances where the customer may not exert control over the staff but they retain the right to control; it is unlikely that self-employment is appropriate.
It should be emphasised that what is important is control and direction of the manner in which work is carried out, not control in terms of attendance at a particular place or at a particular time. For this reason, the medical and healthcare industry is more affected than most and concerns within this sector have already led to a good number of clients consulting us.
Should this matter be of concern to you, please feel free to contact Stuart Hutchison on 0845 606 9632. It is likely you will need to carry out a review of your supply chains and the contracts with your workers to ensure PAYE is dealt with appropriately. It should also be noted that the switch in status can potentially affect the VAT position on concessions and associated perks.