A Guide to IR35
​What is IR35?
​What does IR35 mean for freelancers?

Why is this important?
​Do the IR35 reforms apply to all contracts?
​What’s the risk for freelancers?
​How can Worksome help freelancers?
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​Using Worksome as a Staffing Agency

How do I use Worksome as a Staffing Agency?

How does IR35 affect me as a Staffing Agency?
​How will the IR35 status of my placements work?

Is there anything I need to do?

When will I get paid?

Why are companies using Worksome to manage IR35?
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​Additional Questions
​Can my candidate challenge a project deemed ‘Inside IR35’?

Is there anything freelancers can do to be ‘Outside IR35’ every time?

Does Worksome insure IR35 determinations made in the platform?
​What’s the alternative to managing this process with Worksome?
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IR35 has been around for two decades, and designed by HMRC to make sure freelancers are paying the correct level of tax. Also known as the ‘intermediaries legislation’, IR35 is UK tax legislation that is relevant when a freelancer delivers their service through a Limited Company that they own a material interest in.

Using specific ‘IR35 determination’ criteria, HMRC wish to identify freelancers who are employed for tax purposes were it not for their use of an intermediary, such as a Limited Company setup, in the supply of their service.

This criteria is tested by both parties (the hiring company and the freelancer) answering and agreeing to a set of questions, which HMRC then uses to decide whether or not the payments should be taxed or not.

From April 6th 2021, all freelance projects that are engaged through a Limited Company need to be tested against the IR35 regulations.

Payment for projects that are ‘Inside IR35’ will need to be taxed at source, with PAYE and National Insurance Contributions (NICs) taken from the freelancer’s billed rate.

Those that are ‘Outside IR35’ will be paid gross, and as such will be able to determine when and how their company profits are distributed, which might allow them to benefit from efficient tax planning.

It’s the law, so it’s quite important everyone complies. Hiring companies will have to complete an IR35 assessment for every freelance project, and freelancers will have to assist them by answering a few questions about their work environment, all of which should be completed before the assignment begins. It's another step in the process, but Worksome makes this super easy for everyone.

No, HMRC state that if the End Client (who is hiring the freelancer's services) does not satisfy at least two of the following conditions, then the reforms will not apply and a freelancer will continue to be responsible for determining their own IR35 status:

If the End Client is part of a larger group of companies then the aggregate position of the group must be considered when applying the ‘small companies’ exemption. This could mean that the End Client is defined as small, as per the Companies Act 2006 definition, but they will still need to apply the IR35 reforms.

For more on these exemptions, head to the HMRC website guidelines here.

It can be pretty big. From 6th of April the main risks of non-compliance will be transferred away from the freelancer and moved up to the supply chain. HMRC will be keen to claw back any tax that it thinks it’s owed from, which could mean a long lawsuit, a lot of stress, and a hefty fine. All of this will be aimed at the business who engaged the freelancer and/or the hirer.

We’ll make it simple and fair. With Worksome, when relevant companies (large enough to have to adhere with IR35) post their projects, they will each be determined as ‘Inside IR35’ or ‘Outside IR35’ so freelancers know what they’re getting into before they accept any contract.

Questions to make the IR35 determination will be answered by both the hiring company and the freelancer in the Worksome platform. Worksome does not answer these questions for either party.

Once again, ‘Outside IR35’ will be paid as usual, and ‘Inside IR35’ incurs deductions of PAYE tax and NICs to the freelancer's pay.
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The good news is, there's not much for you to do! It's up to your client to invite you to setup your Staffing Agency account on Worksome. And then they'll attribute you on any contracts for your candidates, so that you automatically receive your margins via Worksome, and can track these in your account.
Find out more in our dedicated FAQ: Using Worksome as a Staffing Agency

From Tuesday 6th April, due to IR35 reforms in the UK, staffing agencies will be paid the agreed margin for any placements at end clients, using Worksome.

It’s 3 simple steps for all contractors you place at companies using Worksome:

Worksome will determine the in/out status of each assignment using data produced by the employer and freelancer, so you’ll know the status of each project and how it will be paid; as will your freelancers before accepting the project. Each determination is backed and insured - ensuring all of your freelancers are paid compliantly.

If your clients are already managing your margin payments with Worksome, you have nothing further to do.

If you are still paying freelancers, or your margin is being paid directly, your end client is at risk. Please ask your end client to invite you to their Preferred Supplier List (PSL) in Worksome and attribute your consultancy to the freelancer contract in Worksome. When your client invites you to join Worksome, you'll receive an email invitation to setup your account. You'll just need to ensure your staffing agency details listed in your Worksome account are correct, and add the Bank Details that your agreed margin should be paid into.

Freelancers and Staffing Agencies, whose end client is using Worksome, will both be paid via Worksome for their contracts. Freelancers will be paid their billed amount, and Agencies will be paid your agreed margin for the contract. No payments for contract work will be paid outside of the Worksome platform.

Worksome will pay the agreed margin to the Bank Details listed in your Worksome Staffing Agency account. You'll be able to view your placements and billing at any time, with full transparency of your margin payments, all within Worksome. This means no more chasing payments again! Find our more in our FAQ for Staffing Agencies.

In order to remove liability for any IR35 wrongdoing, and to centralise all spend, end clients are using Worksome to manage all contracts, tax deductions and payments.

Yes. Under any circumstance they can challenge the decision but we expect that if they’re deemed Outside IR35, they’ll be rather happy. Therefore, those determined as Inside IR35 will be able to submit a dispute within the Worksome platform, who work with tax advisors who will review the dispute and resolve it quickly. Legally, and at any time throughout the assignment, the freelancer can lodge a dispute and this must be resolved within 45 days. But through Worksome we aim to conclude this within an estimated 48 hours.

Each assignment will be judged on its own merits so there isn’t a one size fits all approach. However, IR35 is not trying to punish the truly self-employed so there are things they can do to support this. Professional insurances, marketing costs, concurrent projects are examples of what you would expect to see from a self-employed worker. The same can be said for working remotely, using their own equipment and rectifying mistakes at their own cost.

Yes. All status determinations made post-6th April under the new reforms are underwritten by a Fee Payer policy that protects against future HMRC investigation and/or additional tax liabilities. This means that projects deemed 'Outside IR35' from the questions answered by both parties using Worksome will be covered, should HMRC ever challenge the payments.

HMRC has a Check Employment Status for Tax (CEST) tool, containing lots of questions to be manually answered for each freelance project. You will likely come across this assessment a lot with companies sadly not yet using Worksome. In around 20% of cases CEST is unable to determine whether an assignment is Inside or Outside of IR35. It’s a labour intensive tool that does not integrate with third party software. It also relies on the user understanding IR35 in order to obtain any meaningful decision (which sadly isn’t always going to be the case).

Luckily, Worksome has qualified tax specialists in-house, plus our platform uses the data produced in the hiring process to answer the majority of these without anyone having to lift a finger. Technology, eh.

​Need help? Get in touch!

If you would like to find out more about IR35, and using Worksome as a Staffing Agency, please email our team at recruiters@worksome.com.