IPSE urges contractors to check IR35 status with HMRC

The Association of Independent Professionals and the Self Employed (IPSE) is calling upon UK contractors to use the Government’s new IR35 status tool to ensure that they are paying the correct amount of tax.

The calls follow important IR35 changes which took effect on 6 April 2017, and now see public sector organisations, such as recruitment agencies, responsible for determining the IR35 status of their contractors.

This effectively means that, if the public sector organisation deems a contractor to be inside IR35, that contractor will be taxed in the same manner as an employee – which in many cases can result in an inappropriate amount of tax incurred.

IPSE has warned that many contractors are finding themselves placed in incorrect tax brackets due to the new rules. It says that contractors should consult HM Revenue & Customs (HMRC) to ensure that they are paying the correct amount of tax.

The group is urging contractors to make use of HMRC’s Employment Status Service (ESS) – a new online tool which was released in March in a bid to provide greater clarity around the IR35 status of contractors.

Chris Bryce, IPSE chief executive said: “We urge all contractors in the public sector to complete the test and take the results to their client.

“This is the only way contractors can get fairness and clarity. HMRC has said it will stand by the results of their ESS tool and IPSE intends to hold them to this”.