New HMRC rules now govern the public sector, resulting in a change to the way that contractors must operate.
Independent professionals working in the private sector are required to work via a limited company. Until April 2017, this was also true for the public sector, but new HMRC rules now govern the public sector resulting in a change to the way consultants must operate in this sector.
Before the ‘Off-Payroll Working’ rules were instated in April 2017, public sector workers were responsible for reviewing their own contracts and determining their IR35 status. Now, in this sector, it is the client that is responsible for determining the IR35 status of the contract. Public sector contracts will be expected by HMRC to default to IR35 status unless there is a very good reason to do otherwise, and of course, there is always the risk that HMRC will investigate those contracts that don’t.
Therefore, many more public sector contracts will fall under IR35, and if your contract is one of them, we recommend that you look into working via a payroll umbrella company.
Working in the charity/not-for-profit sector
These rules also apply to certain organisations in the charity/not-for-profit sector, as well as to the public sector. If your client is subject to the Freedom of Information Act (2000), these rules will apply.