We understand that whether it’s “keeping the lights on” or driving transformation, contractors play an integral role in the Information Technology landscape. We partner with clients internationally, across many industries and sectors, providing skilled IT contractors for interim assignments.

We provide the highest level of service and build lasting relationships with our contractors.

Context Recruitment offer:

  • Mature, experienced contract recruitment professionals with industry experience who understand your experience and your requirements.
  • Advice and guidance on contracting including solutions/vehicles, compliance, service providers and industry trends.
  • A hassle-free online timesheet process and prompt payments, with a consultant always on-hand to deal with any calls in relation to finances.
  • A secure, compliant intermediary service with significant financial backing, ensuring that you will be paid on time, every time.


Useful Information and Resources for Contractors

IR35 (Intermediaries Legislation)

If you are a contractor working through an intermediary, such as a partnership or limited company (also known as a Personal Service Company “PSC”), you need to be aware of IR35.

What is IR35?

IR35 legislation was introduced on 6th April 2000 and applies to contractors who are working for a client through an intermediary. The legislation is intended to prohibit workers using intermediaries to avoid being taxed like an employee and having to pay Class 1 National Insurance (NI). Before IR35 was introduced an individual could leave employment and return as a limited company contractor carrying out exactly the same job, paying less in tax and NI than PAYE employees. This was perceived as tax evasion by HMRC.

IR35 applies if you’re working for a client through an intermediary and in reality, you work in the same way as an employee of the client.

Am I inside or outside the scope of IR35?

IR35 applies to all sectors and industries and considers the underlying nature of your working relationship with a client. Even if you call yourself ‘self-employed’ or believe you have an ‘IR35-proof’ contract, you may still be caught by IR35.

If, as a contractor working through an intermediary you are deemed to be “inside” IR35 by HMRC, you will be required to pay roughly the same tax and NI as employees.

Indicators of IR35 Status:

HMRC will look at the contracts that you have in place and the way in which you are interacting with clients (“working practices”) to assess your IR35 status and decide whether there is something called a “hypothetical employment contract” in place. Factors that have been used over the years to determine IR35 status include:

  • Do you have control over when, where and how you provide services, or are you required to work set hours, receiving instructions (like an employee)?
  • Are you engaged to provide personal skills or a service? i.e. do you have an obligation to provide services personally, or are you able to provide a suitable “substitute” to your client.
  • Would you be perceived to be in business on your own account? i.e. risking your own capital, managing P&L etc.
  • Are you treated like an employee?

The above is intended as an overview only and is in no way comprehensive. It is not a substitute for legal advice. Context Recruitment advises that contractors operating through intermediaries seek independent advice and assess their IR35 status at the beginning of each new assignment and at regular intervals. Consequences of failing to comply with IR35 can include back payment of tax, NI (including interest due), and penalties.

Resources:

http://www.contractoruk.com/ir35
https://www.gov.uk/topic/business-tax/ir35
https://www.gov.uk/guidance/ir35-find-out-if-it-applies

Agency Worker Regulations (AWR)

AWR was introduced on October 1st 2011 and applies to “workers with a contract of employment or employment relationship with a temporary work agency who are assigned to user undertakings to work temporarily under their supervision and direction.”

AWR gives agency workers the right to the same basic working and employment conditions they would receive if they were engaged directly by an end user client to do the same job. Such rights are granted after the agency worker completes a 12-week qualifying period (that is 12 continuous calendar weeks), in the same role.

“Basic working and employment conditions” – as defined in the Regulations (via the Temporary Agency Workers Directive), includes: pay, duration of working time, length of night work, rest periods, rest breaks, annual leave and paid time off for ante natal appointments. Note that each term/condition covers many different areas.  

Who does it apply to?

The regulations will affect individuals who find temporary work through an agency. This includes:

  • Agency workers
  • Agency workers contracted under an umbrella company

However, individuals who are genuinely self-employed i.e. in business (whether by way of a limited company or otherwise), of their own account and who do not work under the supervision and direction of the hirer are not “agency workers” and therefore outside of AWR scope (See IR35 for more information on “genuinely self-employed PSC’s”).

Resources:

http://www.contractoruk.com/agency_workers_regulations/
https://www.gov.uk/agency-workers-your-rights/your-rights-as-a-temporary-agency-worker
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/32121/11-949-agency-workers-regulations-guidance.pdf

The above is intended as an overview only and is in no way comprehensive. It is not intended as, nor is it a substitute for legal advice.

Employment Agencies Act (EAA)

The Conduct of Employment Agencies and Employment Business Regulations 2003 is intended to regulate the private recruitment industry and protect ‘work-seekers’.

Key points include:

An employment agency/business cannot:

  • Charge a fee to a work-seeker to find them work.
  • Withhold payments or wages due to temporary work-seekers.
  • Supply a temporary worker to replace someone taking part in industrial action at the hiring company.
  • Make unlawful deductions from pay.

An employment agency/business must make sure temporary workers are:

  • Paid for all the work they do.
  • Paid holidays.
  • Paid at least the national minimum wage.
  • Protected under health and safety laws.
  • Not forced to work longer than 48 hours per week.
  • Given written terms of employment.

An employment agency/business must also:

  • Carry out suitability checks prior to employment for all ‘temporary’ work-seekers.
  • Advertise any vacancy/position with full details and whether it is a temporary or permanent position.
  • Provide terms and conditions to companies hiring temp.

Important Note for Limited Company Contractors

Limited Company Contractors (Personal Service Companies), can choose to “opt-out” of these regulations. You cannot choose which bits to opt-out of – it’s all of the Regulations or none. There are pros and cons to opting out, however a key point to consider is that these regulations were designed to apply to workers under the control of the end-hirer. If you are working outside of IR35, “opting-in” to these regulations may not support your IR35 status.

Resources:

http://www.legislation.gov.uk/uksi/2003/3319/made
http://www.contractoruk.com/agencies/5158.html

The above is intended as an overview only and is in no way comprehensive. It is not intended as, nor is it a substitute for legal advice.

Umbrella Companies

Want/need to go contracting, but don’t want the hassle of incorporating or running a company? An Umbrella Company is a tried and proven solution.

Since the Managed Service Company Legislation was introduced in 2007 there is only one viable choice for an umbrella company, which is the PAYE Umbrella. A PAYE Umbrella treats all of your income as salary. This means you pay employers NI, employees NI and PAYE on all your income. Essentially it is a way of outsourcing your payroll.

The typical Umbrella Company service includes:

  • The agreement for your contract assignment would be between the agency and the Umbrella Company, most likely with you named as the individual worker.  
  • You would submit complete, authorised timesheets to the Umbrella Company who would pay you your salary (withholding NI, PAYE, their fees etc)
  • The Umbrella Company will take care of all taxation, administration, accountancy etc on your behalf. Essentially you are working as an employee of the Umbrella Company.

There are pros and cons to using an Umbrella Company, however generally they are considered a good option for short term contracts. It is quick to sign-up with an Umbrella Company and there are plenty to choose from, however some due diligence is recommended to ensure that they are stable and compliant. Our consultants can provide recommendations and guidance to contractors wishing to use an Umbrella Company.

Resources:

http://www.contractoruk.com/umbrella_company/
http://www.itcontracting.com/limited-umbrella-which-route/

General Contractor Resources

https://www.gov.uk/employment-status/selfemployed-contractor
How the government views contracting.

http://www.contractoruk.com/
Contractor UK is home to the UK’s IT contracting community. Online since 1999, offering daily news & features, comment, over 6,900 articles, contract jobs, rates, calculators & a very active forum with over 18,000 members.

http://www.contractorcalculator.co.uk/
The UK’s leading contractor site. Independently audited traffic (ABC) – 117,790 monthly unique visitors.

www.fcsa.org.uk
Freelancer and Contractor Services Association. As an industry-leading body, FCSA work to protect and support contractors and freelancers.

https://www.professionalpassport.com/Professional-Passport/
We offer a wide range of up-to-date advice and useful services for contractors as well as lists of providers who have passed our stringent audit and approval process, member insurance policies, specialist contract reviews and articles on all the key topics affecting contractors.

 

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