IR35: The largest shakeup in project management careers in a decade

What is IR35?
Why is IR35 happening in the first place?
Why is it called IR35
What makes an employee a good employee?
When will IR35 become effective?
Who is affected?
What does IR35 stand for for consultants project managers?
Why not charge more for your services in order to offset the tax
What does IR35 stand for in relation to projects that employ consultants?
What is the outlook for UK contractors?
Next steps

What is IR35?
We’re talking about IR35 at the moment, but it’s off-payroll legislation.
It all comes down to whether or not an individual is considered an employee of the company. This is dependent on certain factors such as employment status.
Why is IR35 happening in the first place?
Because employers must admit that some contractors are ’employees disguised’.
Dave Chaplin, CEO, IR35 Shield, said in a webinar for BCS (The Chartered Institute for IT). “There’s a hole inside the Treasury bucket.” Contractors and employers both benefit from the tax arrangements that allow them to hire contract staff rather than salaried employees.
According to Dave, the government expects to raise an additional PS3.1bn from the additional tax, but there is no way to measure it.
Why is it called IR35
It stands for Inland Revenue Note No 35.
The actual thing that’s happening is a new Chapter in the payroll legislation. We call it IR35 to shorten it, but it’s actually the off-payroll legislation.
What makes an employee a good employee?
Dave explained that there is no legal definition of what it means for an employee. It’s all determined by the case law. However, certain factors are considered when determining employment status.
Marie Pegram, Partner at UHY Hacker Young and recruitment specialist, explained in the webinar how many factors are considered when determining whether someone is an employee.
Control: Who controls what’s done on the project, how it is done, and when it happens?
Substitution: Are you able to substitute someone to do the work if your availability is not possible? You might be able to in some cases, but as a project manager you have a lot of knowledge that makes it difficult to send someone in if you are sick for a week.
Mutuality of obligation: Are you allowed to decline certain assignments? This examines how you are offered work and the process for accepting it. If the task falls within their job remit, employees are likely to say yes to it.
Risk and reward: Who takes on the risk and who reaps the rewards?
Integration: How well are you integrated into your organization? Are you invited to the Christmas party?
Contract: What does the contract say about you?
Termination: What provision is in the contract that can be deemed to be a termination clause?

When will IR35 become effective?
IR35 has existed since 2000, so it’s not a new concept.
Marie stated that the new off-payroll rules will only apply to services paid after 6 April 2021.
Who is affected?
These groups are affected by the off-payroll legislation:
Employers in the public sector (it’s been used for a while, so it’s not new)
Private sector organizations that are medium or large companies that meet two of these criteria: PS10.2m in turnover, PS5.1m balance sheet, and more than 50 employees*
Or an organization that is part of a large or medium-sized group that meets two of these criteria: PS12.2m turnover and PS6.1m balance sheet, more 50 employees*

Claire Halle Smith, Senior Associate at Wright Hassall, says that if you are a contractor providing services through an intermediary like a personal service firm (even if that’s through a agency), it could be that your tax status may change once the new IR35 changes become effective.
“Your client will need information about your tax status to provide you with a valid status declaration statement. If you are a salaried employee, income tax