Understanding your IR35 options as a contractor

16 March by Cognitive Group

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With April just around the corner, we understand how concerning the changes around IR35 may still be for many contractors. It’s likely that employers looking to engage contractors may seek support to maintain contractual engagements either by reviewing their processes to maximise the probability of securing roles outside of IR35 or by seeking to engage workers on a Statement of Work (SoW) basis.

There are a number of hiring options available to ensure both our clients and contractors can continue to work successfully in a manner that suits them, whether the project falls inside or outside IR35. We’ve pulled together a high level overview of the options available to contractors.

Sign-up to deliver outcomes through a Statement of work based contract

This is a form of contract used by consultancies and agencies to agree work packages with clients.

  • A revised contract form helps to eliminates residual IR35 risk

  • There is an opportunity to increase effective rates through delivery risk sharing

  • Particularly suitable for experienced consultants who are confident of their ability to correctly scope work and deliver on or ahead of schedule 

Cognitive Group offer a Statement of Work solutions to clients, please talk to your contact or get in touch below to see if this is something you can get involved in.

Take out IR35-Insurance

There are a number of insurance-backed options that cover the employer and worker. What do you get?

  • Extra peace of mind that you will get legal and financial support if audited

  • This process is straightforward and provides clarity for compliant contractors

Cognitive have carried out a full assessment of the market to ensure we offer you the most comprehensive and reliable IR35 insurance-backed model.

Use an Umbrella company to go inside IR35

As a contractor, you will technically be employed by the Umbrella Company.

  • Avoids IR35 risks by moving inside IR35

  • Helps you maintain independence and flexibility as a contractor 

  • More appealing to hiring companies than Ltd company options

However, there are some risks to consider...

  • Unregulated Umbrella companies are offering high % take home to contractors – these do not protect contractor of employers

  • Consider whether to charge more to compensate for increased tax burden.

We have a duty of care for both the client and candidate, so will only provide a payroll service using FCSA or APSCO compliant Umbrella companies.

Go Permanent

  • Avoid IR35 risks by moving inside IR35

  • Increased job security & non-cash benefits

  • Reduced flexibility

  • Increased Tax burden

  • If you do decide to move over into a permanent role, you should seek advice as to whether or not this exposes you to a backdated IR35 assessment

Do nothing!

  • You may need to change your contract details and work practices to ensure the IR35 requirements are met

  • Ensure that your client has signed off their position and will not hit you further down the line

Cognitive offer solutions to each of the above options, talk to one our specialists to understand what's best for you.