HMRC ESS tool – First Impressions

  • By Marcus Bateson
  • 20 Apr, 2017
March 5th 2017

CookieCutter have been trying the Employment Status Service tool for different situations. Using our own contractors and clients as examples and also contrived situations where we test to see what happens.

We have been getting mixed results. In several cases, the tool was unable to determine the tax status of the engagement.

In the public sector if the tool produces an in IR35 result, the client must apply the decision. In the private sector, the decision is guidance . There is no apparent difference in the methodology used in the tool between public and private sector clients. We can only speculate that in a very short time the use of this tool will be applied across the board for both public and private sector roles where IR35 could be relevant.

We will of course be monitoring this closely.

The guidance states that where the tool has produced a decision, HMRC will accept the result. They do state that this will not apply where the tool has been contrived to create a desired result. This means you need to fully understand the questions and your answers when completing the tool. The actual reality of the role needs to be considered.

However, with public sector bodies starting to blanket put all roles in IR35 to mitigate any risk that they become liable for PAYE, it almost makes the tool pointless.

Will contractors be able to challenge the public body as to the status of a role using this tool and change it? We will have to wait and see.

By Marcus Bateson 20 Apr, 2017
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By Marcus Bateson 20 Apr, 2017
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By Alix Davis 14 Nov, 2016
Budget 2016 From April 2017 the government will make public sector bodies (PSBs) and agencies responsible for applying tax rules to contractor working in the public sector. This will result in IR35 being applied more frequently by the more risk adverse public service companies even in cases where tax law does not indicate employment status.

CookieCutter can provide a safe and compliant home for those who will be affected by this change.
By Alix Davis 14 Nov, 2016
In October, two Uber drivers won a tribunal claiming that in fact they are employees rather than contractors. This could lead to Uber being forced to fund costly benefits for drivers such as holiday pay, sick pay and pension contributions.

Fallout from this ruling is the increased awareness of employment rights by our clients. As a result contractors we need to ensure that not only do the terms demonstrate the IR35 position, but the actual reality of the relationship also reflects the IR35 position.
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