Manage independently or seek assistance. If you’ve decided to make status determinations for your PSC contractors you can either manage this in-house or look to an external provider. Providers such as IR35 shield offer a range of services for all parties in the chain.
Choose your tool. It’s important when you are making status determinations to show ‘reasonable care’. A good way to do this is to use HMRC’s CEST Tool or a third-party tool to help you evaluate whether a role falls inside or outside of IR35. We advise finding an assessment tool provider who provide insurance to cover any tax liability where HMRC successfully challenges your status determination.
Keep contractors and suppliers informed. Share status determinations with relevant parties but keep a close eye on key contractors whose status will change. Look at contingency plans for loss of talent due to changing status and consider rate increases where needed.
Create a process for challenges to status determinations. Contractors have the right to challenge your status determinations, and you need to respond within 45-days, or you’ll retain the tax liability. This is where reasonable care is important, as you’ll be able to show how/why you made the determinations you did. You should expect some challenges to status determinations and having a process for managing them will help.
Review your contracts. Have a different contract for inside-IR35 and outside-IR35 contractors. The clauses will need to reflect the working practices that led you to the status determination for each role.