Further information has come to light regarding the approach Gopvernment departments are instructed to take regarding contractors. Orange & Gold understands that there is a requirement for all departments to seek assurances about the IR35 status of its PSC contractors for all whose rate is £220 per day or higher and contract length exceeds 6 months. The investigation is to be done at the 6 month point, if not before.
If a PSC contractor considers him/herself outside IR35, then they have to go through a justification process to the department head. If they are 'low risk' on the new HMRC Business Entity Tests, that is acceptable. If they are 'medium' or 'high risk' then further evidence will need to be shown. We do not know what will be acceptable evidence at this point; an independent contract review?
This is an interesting development in IR35 practice. We are in a position here where the 'engager' is taking a responsibility for the IR35 status of its workers, something specifically excluded from the IR35 legislation and resisted in 1999 when the framework was being established. At that time big employers lobbied Government so that they were not required to make such judgements.