Banner Default Image

Insight

29 January 2020 by Gemma Newby
Logo

We are hoping this blog will bring the updates to the questions everyone is asking for but it won’t happen overnight and it must be stressed that this information is based entirely around information if you are working on a placement via MPI only.  Currently most of our clients are working on how to manage this change and how to look at each role that they will need to continue working past 5th April 2020.  This blog is provided as information only, it is not guidance or advice in any way and you should always seek independent and approved financial advise from a regulated source.

 

We are hoping our clients will start to inform MPI on whether they think each role falls in-side the scope or out-side the scope over the next few weeks.  We are having a number of meetings and conference calls each week with our clients to understand how they are preparing.

 

Those found in-scope will be able to continue being paid via their limited company but there will be some changes; firstly the Employers National Insurance that is currently paid to the limited company will be deducted as MPI will have to pay this directly to HMRC, this will create a new pay rate for limited company inside IR35.  This rate is what will then be used to pay the limited company but will it will then be subject to Income Tax and Employees NI being deducted and again this will be paid directly to HMRC by MPI.  The difference will then be paid to the limited company.  Contractors can
continue to run their companies in the normal manner and put legitimate business expenses through as they do now.  Then when they do their tax return each year any tax and employees NI already paid would be deducted from anything that is owed.  Talk to your accountant now to understand the
details relevant to your personal situation. 

 

Those found out of scope will be able to continue being paid as they are now via their limited company at the same rate.

 

There are some really important factors that must be present in order to demonstrate that a role is out of scope that contractors should be aware of:

Firstly end hirers do not have the ‘right’ to move you from the task you originally agreed to do, you have to agree to the change and a new contract may also be issued which is where the contract relationship differs to that of any employee.  If you were an employee the end hirer would have the right to
move you to another task whether you agreed or not. 

Secondly, a legitimate business operation would be able to demonstrate that it incurs costs before it does any work for a client, this could include but is not limited to;
purchase of specialist tools or equipment (not phones, laptops or PC’s), vehicle use for business and other than commuting to/from one place of work, training courses, professional membership fees, Licences, Sentinel Sponsorship costs, CAA requirements or similar, professional development, PPE, insurance , materials or anything else your business may incur whilst going about daily operations.  Again, please discuss with your accountant, understand whether or not you can demonstrate any such costs. 

Thirdly, ensure you do not have any ongoing weekly deductions taken by the company or agency you are supplying – weekly deductions could be considered to demonstrate an employment relationship.

 

Over the next few weeks we will be looking to answer your questions as best we can, generic questions for the blog should be directed to info@mpi.ltd.uk so that we can publish the question anonymously and any answer we are able to provide, if you have a specific question relating to your personal circumstances then please email offpayroll@mpi.ltd.uk and we will respond at the earliest opportunity.’