The NHS works on a case-by-case basis to assess whether their contractors are within IR35.

What is IR35 for public sector contractors?

IR35 is the legislation brought in to prevent so called ‘disguised employees’, which our guide explains in more detail. The decision as to whether or not a contractor came under IR35 rules was originally down to the intermediary agent between the contractor and end client. Changes to this legislation mean that it’s now up to the end client to determine a contractor’s status.

The IR35 scheme first came into place for public sector clients. The NHS initially took a ‘blanket approach’, automatically deeming all contractors to be within IR35 to minimise the risk of errors. They have since changed their response, and now assess contractors on a case-by-case basis.

What does this mean for contractors?

The NHS say they will use the government’s checking tool to decide your employment status for tax. You can also ask the agency or your direct contact for an explanation of any decisions that are made.

Whichever outcome, it’s essential that you keep a record of the decision, as well as the details of any tax deductions and income. IR35 is a complex area, and your status might be different from that of other people working alongside you.

Learn more about our online accountancy services for contractors, or call 020 3355 4047.

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About The Author

Kara Copple

An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.

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