Please note: HMRC released the ESS digital tool / widget to the public on March 2. Here's the link: https://www.tax.service.gov.uk/check-employment-status-for-tax/setup.
To know more about the ESS tool, please Click Here.
How to determine whether an assignment falls within or outside IR35? While the responsibility for making the assessment will move to the end client, you can use their information, or you may have to utilise the HMRC ESS (Employment Status Service) tool for greater clarity. The ESS tool will allow recruiters, or anyone in fact, to get HMRC’s view on the status of an assignment/worker. The tool requires you to input answers to around 50 questions around the relationship between the public sector body and the worker.
It is optional to use the tool, but for recruitment agencies that are not able to get the required information on the assignment from their clients, the ESS tool may become quite important. The initial reviews of the tool have not been entirely positive. The final version of the tool is to roll out in February 2016 and it would be a good idea to familiarise yourself with it.
The technical nature of employment does mean that this online system will potentially not provide clarity on some contracts and then you will need to seek advice from HMRC and make taxation decisions in the meantime which would have to be amended in the future dependent upon the ultimate assessment. The first few months of the next financial year will be testing times both for agencies and for HMRC.
Act now – keep a look out for when the next version goes live for the public to test and then start running your existing contracts through it to give yourself a heads-up on likely outcomes.
Our IR35 experts would be happy to talk to you on a call or visit your office for a chat over a cup of coffee. For any queries regarding IR35, please feel free to contact: