Is IR35 self-employed?

Is IR35 self-employed?

Working from Spain for a foreign company

The composition of the workplace is changing as many organizations hire more outsourced and temporary staff. But as demand for non-permanent employees increases, how can companies attract these workers when they need them?

“Outsourced labor models are a cost-effective solution for many companies,” explains Dr. Magdalena Cholakova, Associate Professor of Entrepreneurship in the Department of Strategic Management and Entrepreneurship at Rotterdam School of Management . “Not only do they work for companies that were originally created with a flexible model in mind, but they are also a model that other, more traditional companies are switching to.”

It is likely that in the future, employers will need to think about developing a “contractor value proposition” in the same way they do for permanent employees. “Traditionally, companies have treated their relationships with subcontractors and contingent workers as transactional rather than strategic,” says Kristofer Karsten, director of HR at Ceridian . “To truly unlock the full potential of this cohort, employers must view them as more than a quick fix to an existing problem.”

Outside ir35

One of the main reasons why companies choose to hire freelancers instead of employees is the cost savings associated with the employment relationship. Employers are not responsible for covering traditional benefits such as health insurance, unemployment insurance and others. In addition, freelancers are often responsible for taxes.

They most likely do not need office space since they work off-site, especially when working remotely. This is a big money saver that you can put elsewhere. Freelancers work with their own equipment and usually don’t need your resources to get the job done.

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They can be hired for a specific project or on an as-needed basis. Once the agreed period of time or project is over, you can evaluate whether this person is a good fit and can continue the working relationship. If not, you simply do not renew the agreement for the next project. Freelancers are also an excellent option for companies that have a fluctuating workload.

Self-employed contractor

The accounts also confirm that all contractor engagements recorded in their accounts were assessed using HM Revenue & Customs’ (HMRC) online Check Employment Status for Tax (CEST) tool. However, that is not the case for people working on the HS2 high-speed rail project. “[HS2] automatically assessed all roles as being within the scope of the off-payroll work rules,” the accounts confirmed.

Computer Weekly contacted Network Rail for comment and clarification on the meaning of the figures in the context of its IR35 compliance strategy and received the following response from a company spokesperson.

“Network Rail is fully compliant with tax legislation. Robust processes and procedures are in place to determine the status of off-payroll commitments against IR35 legislation, ” they said.

However, the decision to make clients responsible for determining the IR35 status of each individual contractor they engage with has led some organizations to respond to the additional administrative burden this places on them by making blanket determinations.

Working as a freelancer for a foreign company

This is a guest post by Richard Clutterbuck, a tax specialist at The Guild and Guild Freelancing, whose agents are present on major UK infrastructure projects including Hinkley Point and Crossrail.

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The crippling shortage of HGV drivers in the UK has been created by a perfect storm of factors coming at the same time and causing an unprecedented supply chain crisis.

Historically, being classified as an employee offered greater job security, but also resulted in a higher tax bill for the individual, as well as additional costs for the hirer. Therefore, numerous carriers opted to operate through their own limited company or as self-employed to benefit from lower taxes, as well as the freedoms and autonomy that self-employment confers. Involving self-employed drivers also helped companies reduce their own tax liability, offering greater operational flexibility.