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Public sector IR35 update

By PaperRocket Accounting, Jul 24 2017 05:00AM

From April 6th 2017, new rules were set in place concerning contractors working in the public sector with regards to their IR35 status.

Now, it is the public sector body that is responsible for assessing a contractors IR35 status, which is a change that many contractors were less than happy about.

Before the new rule was set in place, a petition called ‘Scrap IR35 legislation reform proposals for public sector off-payroll workers’ was set up, where it was put that the changes ‘will severely reduce the income of such individuals but confer non of the rights and benefits of a staff employee’.

At the time, the government responded by saying that the changes would continue with the introduction of the Employment Status Service (ESS) tool to check the employment status of an individual or group of workers.

Currently, IT contractor Mike Gibson has set up and exceeded his £10,500 figure for a Just Giving account that has been created to challenge IR35, with the crowdfunding page being used to ‘conduct a research and analysis exercise to examine possible grounds for challenging IR35’.

IR35 update

Now, the guidance on the public sector rules has been updated, focussing primarily on which organisations these new rules apply to.

In the online document, the definition of a public authority includes:

• Government departments and their executive agencies

• Many companies owned or controlled by the public sector

• Schools and universities

• Local authorities

• The National Health Service (NHS)

The government document states:

Hospitals, GP surgeries and dental practices

Hospitals, GP surgeries and dental practices that provide NHS medical and dental services will need to consider whether the off-payroll working in the public sector rules apply to all contractors working for them through an intermediary. This includes contractors who are providing ophthalmic and pharmaceutical services to the NHS.

Businesses that provide ophthalmic and pharmaceutical services

Retail businesses providing ophthalmic and pharmaceutical services for the NHS, like high street pharmacies or opticians, will not need to check if the off-payroll working rules apply.

Interestingly, the advice given to public authorities is that they will need to decide if the payroll working rules apply and then tell the worker, agency or other labour provider who supplies the worker, if they apply – which will need to be done before the contract or work starts.

The NHS was particularly impacted by these IR35 changes with many locum doctors and nurses turning to the private sector in order to avoid any changes to their IR35 status and take home pay.

This was in turn leaving the NHS short of staff, as well as giving the locum doctors and nurses willing to work for the NHS a lot more power when it came to negotiating their rates, which is perhaps the reason behind the update on this public sector area.

PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.

We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.

Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.

We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.

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