A brief update on the government’s IR35 policy as it drives ever onwards.
From April 2017 the government will be enacting a new policy placing the liability for all unpaid PAYE and NIC balances (in cases where they rule someone acting as a limited company subcontractor was actually an employee.) onto the public sector body which subcontracted out the job, even if it’s through an umbrella company.
The net effect of this will be to place all public sector bodies who outsource work into panic as they will now be open to huge liabilities for the thousands of outsourced workers in the public sector. With the changes coming in a number of Contractors may expect to be offered new terms at much lower salaries as regular employees, however our own practice has already learned of a number of worrying cases where rather than being offered an employment contract as this legislative change intends a number of contractors in the social services sector are being forced to join highly expensive Umbrella company schemes by local councils.
Under these schemes the contractors are forced into acting as employees of the umbrella company who will deduct as much as £200 per month from each person’s salary for Administration. Speaking as payroll experts, these schemes appear to amount to nothing more than an attempt by Local Councils to force people who should be offered fair contracts or employment into schemes which benefit the councils at the expense of taking huge chunks of their contractors’ salaries from them.
We will update this blog as more news emerges on the IR35 public sector topic, but don’t be surprised if the changes begin to feature in the media soon.