What is the new process for assessing status under IR35?
The end user client will be responsible for assessing if the contractor is employed or self-employed for tax purposes. It is required to take reasonable care in carrying out the assessments.
When an assessment is carried out the outcome must be confirmed to the contractor with accompanying reasons in a Status Determination Statement (SDS). This SDS must be provided to the contractor before making payment to them. It must also be provided to the agency if there is one in the chain (more on this later).
The end user client must have a dispute resolution procedure to enable to the contractor or agency to appeal the assessment outcome.
Related FAQs
To be eligible for CBILS, the British Business Bank has confirmed that businesses should be able to answer YES to the following points:
- Your application must be for business purposes
- You must be a UK-based SME with an annual turnover of up to £45m. This includes sole traders, freelances, body corporates, limited partnerships and limited liability partnerships. For sole traders to be eligible it is expected that sole traders will need to have a business account with its funders and not be operating via a personal account
- Your business must generate more than 50% of its turnover from trading activity
- Your CBILS-backed facility will be used to support primarily trading in the UK
- You wish to borrow up to a maximum of £5m.
Businesses meeting these criteria from all sectors can apply save for Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers), the public sector including state-funded primary and secondary schools, employer, professional, religious or political membership organisation or trade unions which are not eligible.
Your borrowing proposals must be considered viable by the relevant lender under normal circumstances aside from the Covid-19 outbreak, and the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty. Lending decisions are delegated to the accredited lenders and lenders will need further information to confirm eligibility.
The eligibility criteria for CBILS does not require lenders to take into account other forms of Government support that SME’s may already be benefiting from, most notably business rate relief.
We understand that ownership structure is not taken into account when confirming eligibility and that businesses back by a PE funder or a subsidiary of an overseas entity can be eligible if it meets the other criteria.
An update on eligibility – 3 April 2020
Previously, for facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using the Scheme. The requirement for insufficient collateral has been removed allowing those SMEs who are considered to have sufficient collateral to access the Scheme. We would expect that where security is available, a lender will seek to take security over the relevant assets.
The fee payer that pays the fee to the contractor’s PSC for the services (end user client or agency) will be responsible for operating PAYE and deducting NIC’s. The fee payer must also pay employer NIC’s and where applicable the apprenticeship levy so there will be additional costs involved in the event of a change to employed status for tax purposes.
If the assessment concludes that the contractor is self-employed, the PSC can continue to be paid gross.
If your 30-day visa to travel to the UK (vignette) has expired or is about to, you can request a replacement free of charge until the end of 2020 by contacting the Coronavirus Immigration Help Centre. This can be granted with new and extended validity dates to allow travel once you are able to.
Many employees require flexible working now more than ever. That could be reduced hours, working from home, reduced days, etc. Be careful to act fairly when considering these requests as they can be a discrimination claim in the waiting.
A flexible working request is a request for a permanent change to the contract of employment however to encourage a greater take up during this difficult time, you can agree this on a temporary basis.
At the discretion of the lender, the Scheme may be used for unsecured lending for facilities of £250,000 and under.
Lenders were required to demonstrate lending additionality (i.e. lending that without the Scheme, wouldn’t have otherwise taken place). The Scheme has been extended to those businesses who would have previously met requirements for a commercial facility and would not have been eligible for CBILS. As a result it is suggested that all viable small businesses affected by Covid-19, and not just those unable to secure regular commercial financing, will now be eligible should they need finance to keep operating.
Primary Residential Property cannot be taken as Security under the Scheme. If the lender can offer finance on normal commercial terms without the need to make use of the Scheme, they will do so.