The reality is that IR35 will have no impact whatsoever on 99.9% of Irish contracts, but some of our clients are intrigued and even concerned if they will be affected should they engage with a UK client in the future.
Most of us are already aware of recent changes to IR35 legislation in the UK which is essentially a payroll tax for UK based contractors.
Often, these regulations spill over to some of our Irish contractors, normally in cases where an end client may be a UK entity.
Having said that, over the past number of weeks, a handful of our clients have been asked to perform an employment test with HMRC to establish if they fall inside or outside the new IR35 Rules.
In all of these cases, our clients, the independent professionals were deemed to be outside of IR35 regulation and correctly recognised as self-employed professional contractors.
Below, we give you some insight into the questions asked and explore the most common answers for the majority of our clients:
Q: Do you provide your services through a limited company, partnership or unincorporated
association?
A: Yes, is almost exclusively the answer here. This is the standard way for contractors and independent professionals to manage their contract and be covered by insurance.
Q: Have you ever sent a substitute to do this work?
A: Substitution on a contract is not often seen, but a necessary point for high value work.
Allowing a substitute is important to enable a project finish on time and avoid penalties in the event something happens to the contractor.
Q: Does your client have the right to move you from the task you originally agreed to do?
A: No is the answer our contractors all answered here.
In our clients’ scenarios, they were brought in as specialists/professionals for a specific element of a project, and simply moving them about is bad business for all involved.
Q: Does your client have the right to decide how the work is done?
A: No, this is generally discussed with the client and any changes to the agreement are included in an amendment to, or a new contract.
Q: Does your client have the right to decide where you do the work?
A: This is generally decided on a case-by-case basis, security and data concerns of the client may have an impact on determining this.
Q: Will your client provide you with paid-for corporate benefits?
A: No is the answer to this for all independent professionals.
Q: Will you have any management responsibilities for your client?
A: This was a no – these clients were being brought in for a specific project/task.
Q: Does the current contract allow for it to be extended?
A: Extension clauses are common where work is yet to be finalised.
Q: Have you done any self-employed work of a similar nature for other clients in the last 12 months?
A: Yes, but this is not always the case and is dependent on workload at any given time.
Many of the questions are put in place to remove doubts over the status of particular sectors and to remove the chances of ‘bogus self-employment’.
In most recent weeks, we have seen workers such as Uber Drivers and Food Delivery drivers being classified as employees.
Indeed, HMRC itself had originally decided to classify many of its own professional IT contractors as employees, but on closer inspection and the running of the employment test, 905 of these workers were deemed to be self-employed. There has been plenty of noise surrounding the impact that IR35 will have on Irish contracts, Irish agencies, and even Irish contractors – truth be told, it will have no impact whatsoever on over 99% of the contracts we come across.
If you have any queries or concerns regarding IR35, please get in touch with your dedicated account manager within Icon Accounting or contact info@iconaccounting.ie or call 01-8077106 where our team will be more than happy to assist and advise.
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Icon Accounting, Columba House, Airside,
Swords, Co. Dublin, Ireland, K67 R2Y9