1.The client has no liability for your tax when your contract is out of scope of OPWR/IR35. IR35 for the private sector is correctly called off payroll working rules (OPWR) even though HMRC refer to them as IR35. They are completely different from the deemed salary calculations for PSCs. In IR35 the client would have been liable for unpaid taxes of the PSC.
2. The aim of OPWR is to kill off PSCs. HMRC has created a test to check employment status for tax (CEST). Your contract will automatically fail the test if you are a director of a PSC. Beware of people who claim CEST is not valid. Case law and legislation are inevitably playing catchup with HMRC policy.
3. OPWR does not apply to Charles Marcus consultants working outside the direction and control of the client. HMRC told ICAEW’s tax faculty, of which I am a member, that intermediaries which are not PSCs will be treated differently from PSCs in the new OPWR regime. The Financial Secretary to the Treasury announced in a written ministerial statement that the new OPWR will be tweaked in the Finance Bill 2021. If a worker employed by a company under a contract of employment that operates PAYE on payments to the worker and that worker performs services to a client, OPWR should not be applied. This is the situation of Charles Marcus.
4. Being in an umbrella company is not the same as permanent employment even though you may pay the same tax. If OPWR apply to you in your next job, you will be a deemed employee. There is a new category of worker called a deemed employee, not an employee, which does not have the statutory rights of an employee. You will be offered an umbrella company with complex allowances in lieu of the rights you do not have. Charles Marcus is not an umbrella company.
5. Being inside or outside IR35 is a fact to be determined by the client after taking reasonable care. This does not mean it is the client’s choice. OPWR only apply if you work under direction and control of the client to carry out your tasks. This is often referred to as being inside or outside IR35. Canteen workers, cleaners and data entry staff are usually inside IR35. Highly-skilled consultants, change managers, system architects should be outside IR35. This can be determined by a simple test.
6. HMRC has clearly stated that Blanket Decisions that all tasks are inside IR35 are not ‘reasonable care’. The worker can appeal a Status Determination at any time during the contract. Blanket decisions will be challenged when the OPWR are actually implemented.
If you have any queries or questions relating to the above please contact CMHQ (firstname.lastname@example.org)