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SWOT Analysis: Is The Job For Me?

This activity will help clients to appraise a new job or career opportunity by assessing their strengths and weaknesses against the opportunities and threats created by the role. 

 What To Do: 

1. Consider the new role/opportunity. What would you be expected to do, and what skills and experience would you need? 

2. Fill in the chart below, taking each section in turn: 

Your Strengths 

Think about the skills and experience you have that is applicable to the new role/opportunity. 

  • What have you achieved? 
  • What are you good at? 
  • What skills do you have? 
  • What are your personal qualities? 

Your Weaknesses 

Think about what skills and experience the role requires that you do not have. 

  • Do you lack any skills/qualifications? 
  • Do you lack any work experience? 
  • What personal qualities would you need to portray? 
  • What do you not enjoy doing? 

Opportunities 

Think about why you want the job. What does it offer in terms of development opportunities and how far does it go to meeting your career needs? 

Threats 

Think about the disadvantages of the job, the downsides and the risks of not getting it. 

  • What would the impact be on your personal circumstances, e.g. family, home and relationships? 
  • Who might you be competing with? 
  • Are there any requirements you can’t meet, e.g. are you required to drive but don’t have a car? 
What You Need to Know About IR35 and the Tax Implications
May 7, 2020
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ARTICLE BY: By Jonathan Amponsah CTA FCCA, – The Tax Guys 

Although the government announced a delay to the introduction on 17 March 2020 (due to Covid-19), it’s still important to understand the implications and the options available.

Let look at eleven key areas that contractors need to think about in regards IR35 and the tax implications that are coming. They’ll also be useful to review for HR departments who want to ensure that people undertaking work for their organisation are compliant:

1. Back to Basics

Despite the complexity of the IR35 rules, it is important to note that nearly all IR35 cases go back to the basic principles laid down in a 1968 tax case called ‘Ready Mix Concrete’. In the latest high-profile BBC cases, the Tribunal went through the three key principles of Mutuality of Obligations, Substitution and Control.

So the first thing to do before you throw in the towel and assume you are caught by IR35 is to test your working arrangements against these principles and ask yourself the following questions: Can I send in another person (substitute) to work on my behalf? Can I refuse to work and is my end client obliged to offer me work (mutuality of obligation) and what degree on control is exerted on how I do my work?

2. Release of a new CEST Tool

HMRC has released an enhanced version of the CEST (Check Employment Status for Tax) tool [https://www.gov.uk/guidance/check-employment-status-for-tax]. It is understood that this tool has been rigorously tested against case law and settled cases by the taxman. HMRC promise to stand by the results produced by the tool provided the information entered is accurate. So, if you’re not sure, simply take this test or engage a specialist tax adviser to provide you with formal tax advice on your situation.

3. Tax Implications

Assuming you’ve been properly advised that you’re caught by IR35 or the CEST tool suggest so and you are happy to accept that, then the general tax implication is that you are responsible for paying income tax and National Insurance contributions on an amount called deemed payment.

You will need to calculate this deemed payment on your limited company income for the year.

This means that you deduct your Pay As You Earn (PAYE) salary, a 5% expenses allowance, plus any pension contributions.

What’s left is then treated as if it were the gross cost to the employer (deemed payment). So, let’s say if you have £100,000 income, you pay £10,000 as salaries and pay £10,000 into pensions. And let’s say you’re eligible for the 5% expenses deduction. So, the deemed payment which you will need to apply income tax and NI on will be £75,000.

In practice, if you are certain your contract is caught by IR35, then the simplest solution is to pay out all of your limited company’s income less legitimate expenses and pension contributions as a PAYE salary.

4. Public Sector IR35 and tax implications

Originally, the responsibility for determining IR35 status was placed on the contractor and not the end client. But in 2017, the rules changed for those working with public sector clients (HMRC, NHS, the MOD and the like). Here the responsibility to prove self-employment status shifted from the contractors to the public sector client. Under this rule, where a contractor is caught by IR35, they will be taxed and pay NI as an employee. There is no 5% deduction for expenses under the general IR35 deemed payment tax calculation.

5. Private Sector IR35

Fast forward to April 2020 and we now have another IR35 rule called off-payroll working tax rules. These rules are aimed at big private organisations (see exemptions and further aspects below) and the idea is again to shift the burden of determining the employment status of contractors or workers from the contractor to the private organisation. So, in effect similar to the public sector rule but with some differences including the need for the private sector client to carry out an assessment of the employment status of the worker.

6. Private Sector IR35 tax implications

Under the new rules, the fees paid to the contractor, called the “direct deemed payment” are to be treated as employment income. This means PAYE and employees National Insurance is deducted from that direct deemed payment. Then the entity paying the contractor, which could be the agency or hirer, has to pay their employment taxes on top.

7. HMRC will enquire only if it “suspects” fraud

With the private sector IR35, HMRC has recently announced that it will only use the information it gathers from the new rules to open an enquiry into earlier years if there is reason to suspect fraud or criminal activity. Whilst this will be welcome news for many contractors who are worried that a change in their status stipulated by their private sector client will lead to costly investigation, it is worth bearing in mind that the offence of fraud (or cheating the public revenue) is wide ranging and can catch behaviours including: Withholding PAYE/NI; and failing to disclose income.

In the context of IR35, it is not yet clear how HMRC will view a situation where PAYE/NI were not accounted for and where deemed payment income was not disclosed. With the complex rules around IR35, it is envisaged that a pragmatic approach will be adopted by HMRC.

8. Exemptions

It is important to first note that the new rules do not apply to all private sector end clients. Those clients qualifying as “small” will fall outside the scope of the new rules. The companies act definition of small company will be used for this purpose. Therefore where the private sector client does not have a turnover of more than £10.2m, balance sheet value of more than £5.1m and employees of more than 50 (remember any two of the three tests will suffice) then it does not have to assess the employment status of its workers.

So, for contractors who are worried about the new IR35 rules, finding out a bit more about your end client might prove a worthwhile exercise.

9. Provision of Assessment Statement and reasons

Under the new rules, the assessment carried out by the private sector end client will be referred to as a “Status Determination Statement” (SDS). The end client will not only be required to provide their assessment to the worker or contractor but also provide the reasons and rationale behind the assessment.

10. Penalties and Mitigation

With the new rules, it is inevitable that disagreements between HMRC and tax-payers would ensue. In the IR35 case of Paya Ltd, HMRC attempted unsuccessfully to argue that there had been “carelessness” in the company’s behaviour, so it (HMRC) could use the longer six-year, rather than four-year limitation period. And, perhaps so that HMRC could charge carelessness penalties.

Where a contractor has sought advice on their IR35 status, any assertion of carelessness should be strongly defended. Where HMRC is minded to levy a penalty and the issue of carelessness cannot be defended, then the suspension of penalties should be considered as a way to reduce your taxes.

11. Options under the private sector IR35

As stated above, some companies are exempt from the new rules so there is always the option of working with these companies and not with the big banks and PLCs. A second option would be simply to accept employment contract(s) with your end client(s). Alternatively, you could choose to work under an umbrella company where they deduct your taxes and pay over to HMRC.

For many contractors, the new rules may sadly spell the end of their limited company. They’ll need to take specialist tax advice to make the most tax efficient decision when making the arrangements.

ESFA Update: 6 May 2020

Latest information and actions from the Education and Skills Funding Agency for academies, schools, colleges, local authorities and further education providers.

Documents

ESFA Update further education: 6 May 2020

ESFA Update academies: 6 May 2020

ESFA Update local authorities: 6 May 2020

Details
Items for further education
InformationLatest information on coronavirus (COVID-19)
Informationprovider relief scheme
Informationpaying apprentices that are furloughed
InformationSecretary of State approved list of independent special schools in England and Wales and special post-16 institutions
Information2019 to 2020 year-end forecast funding claim cancelled
Informationnon levy procured apprenticeships contracts
InformationESFA funded adult education budget funding rates and formula guide 2020 to 2021
Informationpublication of ESFA adult education budget funding rules for 2020 to 2021
Information16 to 19 funding regulations guidance
Information2020 to 2021 student support scheme guides
Informationoff-the-job training and maternity leave
Informationapprenticeship service – new apprentice record status
InformationWhat impact do school closures have on my safeguarding responsibilities under the Prevent Duty?
Items for academies
InformationLatest information on coronavirus (COVID-19)
Informationupdated academies chart of accounts
Information16 to 19 funding regulations guidance
Information2020 to 2021 student support scheme guides
Informationwhat impact do school closures have on my safeguarding responsibilities under the Prevent Duty?
Items for local authorities
InformationLatest information on coronavirus (COVID-19)
Actionlocal authority adult education budget and apprenticeship funds and 16 to 19 funds return for 2019 to 2020
Information2019 to 2020 year-end forecast funding claim cancelled
InformationESFA funded adult education budget funding rates and formula guide 2020 to 2021
Informationpublication of ESFA adult education budget funding rules for 2020 to 2021
Information16 to 19 funding regulations guidance
Information2020 to 2021 student support scheme guides
InformationWhat impact do school closures have on my safeguarding responsibilities under the Prevent Duty?

Published 6 May 2020