What to look for in an IR35 status tool in 2022
We’re now more than a month into the new tax year, and more than a month since the ‘soft-landing’ to IR35 ended. While the removal of the soft-landing predominantly impacts end clients and recruiters, headlines around its end have served as a reminder of the importance of ensuring your IR35 status is correct. After all, you may still be responsible for your own IR35 status determination, in which case you also hold the tax liability. This means you need to be confident in your determination or else you will be liable should HMRC investigate and find that you got it wrong.
If you’re not responsible, then that means your end client will be issuing your status determination statement (SDS), and either they or your fee payer (depending on where the liability sits in the contractor supply chain) holds the tax liability. In this instance, they want to be confident they have given you the correct status determination, but also be able to show that they have taken due care in reaching that decision.
Whether it’s you, your client, or your fee payer who holds that liability, you may wish to review your IR35 status regardless. This could serve the purpose of ‘backing up’ your own decision, you may wish to show it to your client to prevent falling victim to a blanket determination or simply to help them reach an appropriate decision. In order to review your status, it’s a good idea to use an IR35 status tool in order to get an impartial opinion. But how do you choose which one to go for?
Here’s what we think is important when looking into an IR35 status tool.
Clear and easy to understand
HMRC’s Check Employment Status for Tax (CEST) tool has come under fire from many contractors and clients for being, quite frankly, a bit too confusing in terms of the questions it asks. It’s been flagged that the wording of the questions is too vague and not nuanced enough – particularly since it’s dealing with such a complex topic. Some of the answers are a bit too similar as well, which has led to some contractors not knowing which they should select.
A good IR35 status tool should be clear and easy to understand with nuanced questions and distinct answers. The Kingsbridge IR35 Status Tool has questions developed by Andy Vessey, Kingsbridge’s Head of Tax, who has been working with IR35 for more than 20 years. The tool asks contractors between 29 and 34 carefully crafted questions that can be answered with a straightforward yes or no and cover all aspects of the contract wording and working practices. It couldn’t be easier.
A comprehensive status report
If the Kingsbridge IR35 Status Tool believes your case is clear-cut with a defined inside or outside IR35 status determination, you’ll find yourself with an instantly generated result, plus a comprehensive report that highlights the positives and/or negatives of your engagement. This report is helpful for you, or your end client, need to see exactly why a particular determination has been reached. This is in contrast to other tools such as CEST, that can leave you with a determination but very little idea of how that conclusion has been reached.
A hybrid solution for indeterminate results
CEST gives very little support for indeterminate results which is, naturally, of little use to contractors and end clients trying to reach a decision. You should be looking for a tool that provides a solution for indeterminate results. Kingsbridge’s hybrid model does just this, by passing your indeterminate result over to one of our in-house IR35 experts for a manual review. Our specialist will be in touch if they have further questions for you, and will then issue you with your status and report. This hybrid approach gives the best of both worlds: the speed of an automated service combined with the human approach needed for trickier cases – giving you and your clients confidence that your status is correct.
The ability to be backed up by IR35 insurance
While it’s vital that you have confidence in your IR35 status, it’s also great to have the peace of mind that being appropriately insured brings. As well as our status tool, Kingsbridge also offers IR35 Protect, complete IR35 cover that flexes to cover whoever holds the tax liability in any given engagement, whether you, your end client, or your recruiter. This means that everyone in the contractor supply chain has the peace of mind of knowing that your insurance is taking the weight of the financial risk and, in turn, making you a much more desirable hire.
What’s more, IR35 Protect Premium gives you unlimited access to the Kingsbridge IR35 Status Tool, providing even more peace of mind with no hidden costs.