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New Post 1/7/2020 5:18 PM
User is offline gh05
19 posts
9th Level Poster


Contract Business Analysis in the UK - legislation changes? 

I've just finished a PAYE type contract and need to look for something else pretty soon. Recently I had a call from a recruitment agent who had a contract which would last until April. He said that after this it would be far less worth contracting because of the changes to legislation for contractors (IR35 rules) and that many contractors were now going to permanent work because it would be less profitable to contract but also more 'risky'.

It wasn't a great surprise too hear this as I am aware that IR35 will apply to private sector contracts soon but I did wonder what he meant by 'risks'. He spoke of how the inland revenue would be after contractors who hadn't done things properly. Is anyone here knowledgeable to elaborate please? Also is it actually going to be the case that contracting as a business analyst won't be worth it anymore and that the market for it will dramatically die down?

Thanks in advance. I've been considering contracting properly in order to save money faster before moving to a permanent role eventually.

 
New Post 1/8/2020 12:20 AM
User is offline Stewart F
96 posts
7th Level Poster


Re: Contract Business Analysis in the UK - legislation changes? 

Hi gh05, 

I am a BA manager and have also been a contractor here in the UK. This old chestnut has been around for ages as you know, and it seems to rear its ugly head every year. 

So what changes are there? Well the actual main change is that the organisation trying to hire you as a contractor now have to do some more work to prove that you are not on their payroll (i.e. a full time member of staff). 

For the contractor they have little change in this, other than, I would suggest, keeping proofs of the fact that the company you worked for knew you were outside of their payroll (your actual contract should include this).

For more information see the HMRC website about it. You can find it here ( https://www.gov.uk/guidance/prepare-for-changes-to-the-off-payroll-working-rules-ir35).

This means that starting from 6 April 2020, medium and large businesses must sit down and figure out whether these tax rules apply to any individuals that are working through their company – and if certain individuals are found to fall under the reformed IR35 measures, the company, agency or third party paying the company that worker is employed by, will henceforth need to deduct Income Tax and National Insurance Contributions, and also pay employer National Insurance Contributions.

It’s important to note that the responsibility to assess your employment status and pay or deduct tax contributions falls to the businesses you’re carrying out work through – not you. It’s also worth mentioning that HMRC will not come after you retrospectively for non-compliance. The UK Government has said there will not be targeted campaigns concentrating on previous years.

Crucially, off-payroll working rules don’t apply if the agency, company or a third party supplying workers directly employ them and deducts Income Tax and National Insurance Contributions.

So, those are the changes. What happens next?

According to the Chancellor, another consultation on the reform and the logistics of how it will come into effect will be published in early 2019. That consultation will then go on to guide a draft Finance Bill that’s expected to be published later that summer. But in the meantime, it’s important to start preparing now.

Medium and large companies that employ contractors or interim workers should identify how the imminent legislation will apply to them and make those individuals aware of the anticipated changes. 

If you need help or advice, the UK Government has a dedicated IR35 helpline to handle enquiries.

In short then, the two key points are that the company that has employed you/your company must identify you as NOT requiring to pay National Insurance/Income Tax. So you need to make sure that they have done that. If they haven't and they do deduct these taxes, you need to contact HMRC to make sure you don't pay it twice. 

I think the Agency that you spoke to is trying to scare you into applying for Perm jobs. He or she is actually talking rubbish. Ignore what they say.

Carry on contracting as you did before. If you have any doubts, talk to your accountant. But fundamentally, when you start a new contract, you just need to check that the company you are about to work for (i.e. not your own personal company) has you listed as NOT liable to them deducting Income tax and National Insurance.  

I hope that helps. 

 
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