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On 2 March 2017, HMRC published a new employment status checker for the purposes of determining whether the IR35 (intermediaries) legislation will apply to a particular set of facts. The legislation will apply only where the worker would (for tax or NICs purposes) be an employee of the client if they worked directly for it (rather than through the intermediary).
HMRC states that the service can be used for current and future engagements in the private or public sector, and it is expressly confirmed that HMRC will stand by the result given by the checker unless it is subsequently shown that the information provided is inaccurate. Given its binary nature, the service is necessarily formulaic in its approach. In particular, the existence of a right of substitution appears to preclude the legislation applying.
In practice, other factors (such as mutuality of obligation) would seem relevant to a determination. HMRC's previously stated guidance certainly suggested a less rigid approach, as does its Employment Status Indicator (although this does not apply to arrangements potentially within IR35).
Comment
Employment status is a hot topic at the moment and this may be one of many tools brought out to help both individuals and employers. Whether it will prove to be effective remains to be seen, but until the law is reformed in this area, tools like this will attempt to provide some clarity.
At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and the Employment team will be happy to discuss it with you.
