Some small companies are assuming they can ignore upcoming changes to the IR35 Regulations, but should they?
It is the case that IR35 does not apply to engagements that are direct with an individual (not via a PSC or personal service company), and even where the individual is engaged via a PSC the responsibility to make a status determination and potential liability for unpaid tax does not apply to small companies.
That said, the introduction of IR35 liability is focusing attention on what is known as the HMRC CEST test (Check Employment Status for Tax) which is supposedly being upgraded to make sense for all industries. As it is a test to determine whether someone is employed or self-employed, it applies to direct engagements as well (where liability for employment taxes has always rested with the employer if they engage a person as a self employed contractor when the reality of the situation is that it is an employment relationship)
Therefore, when the test is upgraded it would be sensible to apply it to direct engagements as well as those engaged via a PSC.
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