IR35

how to stay
compliant to
contractor rules
with Sparta Global
 In 2017 HMRC introduced changes to IR35 ‘off-payroll’ rules that would impact the
WHAT IS IR35?

public sector’s use of contractors. With these amendments to be extended to the

private sector in April 2020, what does this mean and what can our clients do to
prepare in advance?

At its most basic, IR35 is a piece of legislation designed to tackle tax avoidance from
'disguised employment'. This is where self-employed contractors have set up limited
companies in the past to pay themselves through dividends – something that is not
subject to National Insurance.

The legislation was first introduced in 1999, but in the 2016 Autumn Statement,
chancellor Phillip Hammond announced public bodies using contractors would be
responsible for IR35 enforcement from 6 April 2017. However, responsibility can vary
depending on sector and this makes IR35 compliance slightly more complex.

HowWILL
HOW will IR35
IR35 changes impact
IMPACT THE the public
PUBLIC SECTOR:sector?
In the public sector, IR35 status will now be determined by the client and not the
contractor - putting the burden of responsibility on the entity that pays the contractor. In
many cases this will be a traditional agency, but agencies are unlikely to have sufficient
information about the working practices of their contractors so will ask the client to give
an opinion on IR35 status.

With the complexity of IR35 rules, clients are less likely to know for certain whether the
engagement is ‘inside’ or ‘outside’ IR35. These terms indicate a contractor’s IR35 status
as being a genuine contractor (outside) or an employee for tax purposes (inside). As
clients or agencies will become liable if they make the wrong determination, they are
more likely to take a risk-averse approach and decide to apply IR35. In short – this
means paying more tax.
How does Sparta Global’s model counteract the
confusion around IR35 compliance in the public
sector?

Our business model is the perfect way for clients to access the IT talent they need,
without the risk of IR35 non-compliance. Our business model means our IT consultants
are employed full-time by Sparta Global - covering their training and at least two years of
contracted work. This means our consultants are IR35 compliant throughout their time on
client site. Should our clients want to keep hold of our contractors on a more permanent
basis, they can be easily transitioned to permanent members of staff, with no overlap for
tax confusion.

The private sector is due to change responsibility

for IR35 compliance from contractor to client, what
does this mean?
When the government introduces a change to IR35 legislation in April 2020, private sector
contractors will be subject to the same rules that contractors have been working under in
the public sector.

Many IT companies have responded to the news by preparing to axe the number of
contractors they use – due to general confusion around how the IR35 changes will
come into effect and what this will mean for their contractor costs. Apart from software
development businesses, financial services companies hire more IT contractors than any
other sector and it is likely they will feel the biggest pinch from IR35 changes. While we
understand the fear amongst organisations that rely on contractors for expert technical
skills, our model has been designed to remove that fear and the risk of non-compliance, all
while continuing to supply clients with a skilled pipeline of UK tech talent.
 If you want to find out more about our track record in Public Sector IT
consultancy, click the video to hear about our work with Ministry of Justice

" We have a large number of projects

where we need to embed testers. We
use a blend of Sparta Global's highly
experienced consultants and like to bring
in some graduate talent as well. There's
a huge raft of skills that need to be filled
and through the different interests of the
Sparta Global 'Spartan' consultants, we
can fill those."

- John Reber
IT Programme Manager,
Ministry of Justice

If you would like to find out more about Sparta

Global's leading consultancy services, contact our
team today:

chris white
SALES DIRECTOR

PHONE: 0208 040 2333

EMAIL: cwhite@spartaglobal.com
WEBSITE: www.spartaglobal.com