There has been a rapid increase in the number of self-employed people over the last few years, the latest figures from the Office of National Statistics from 2018 show that it rose from 3.3 million in 2001 to 4.8 million in 2017. Couple this with the rise of the gig economy and it becomes a very complicated picture. We had Matthew Potter from Howes Percival with us for the afternoon taking us through the minefield of self-employment, IR35, and the gig economy.
Matthew started off by updating the group on a number of high-profile cases such as Uber and Deliveroo. These showed the importance of making sure you as a business have a clear understanding of the difference in treating those who are self-employed differently to workers. The Deliveroo example very clearly showed that riders had the ability to turn down work without being penalised and were able to substitute someone else for themselves. These gave the room good working examples of when the three contract of service conditions were fulfilled and what it does and doesn’t look like in practice.
After a short break of lots of tea, coffee, and cake the group came together for the second half of the afternoon, this time focusing on off payroll working and changes to IR35. Matthew started by highlighting that from April 2020 medium and large companies in the private sector which contract with personal service companies will have to account for tax and national insurance through PAYE. This means that end users will be responsible for determining the employment status of individuals working for them through their own limited company, but don’t worry, HMRC have provided a guidance document and online checking tool.
As the end user businesses should have a process in place to deal with disputes around the determination they make, Matthew recommended taking specialist advice regarding workers. He went through a number of factors to consider when making a decision about the tax status of a worker including: right of control, employee benefits, length of engagement, and whether they’re an integral part of the organisation amongst other things.
Finally he presented a number of case studies which clearly showed the importance of making a clear determination and the factors affecting the result of the determination. He also covered the impact IR35 changes have had to the public sector, which had these applied to it in April 2017. Initially a blanket statement was released stating all contractors operating Personal Service Companies were inside IR35 rules, this made life tricky as a number of workers chose to quit the NHS or work via umbrella companies which was not necessary. They later stated all assessments should be carried out on a case by case basis.
If you would like to see some of the areas covered by Matthew you can find all the slides here. The afternoon was kindly sponsored by Howes Percival and held at The Nest.
