UK Based Contracts and working on related overseas contracts - CONTRACTS OUTSIDE IR35 and BREXIT
Prior to April 2017, Engineer Contractors/Sub Consultants who provided Contract Services to private and public sector businesses (Clients) were responsible for paying the appropriate taxes and National Insurance contributions, as they usual had their own UK based Limited Company, to provide these Services.
However, from April 2017, the responsibility for assessing and determining IR35 status shifted from the individual Contractor to the Recruitment agency that engages their services, for their Consultant/Contractor Clients. Therefore adding an additional cost to the end Client and limited control of the Engineer/Sub Consultant on the renumeration agreement/process, even though they are managing the revenue/cash flow for their Ltd Company.
From April 6, 2021, though, the Tax Authorities (HMRC) dictated that the responsibility has shifted to the Consultant/Contractor Client to ensure appropriate taxes & Social Insurance are paid by the Engineer Contractor (Ltd Company). Therefore ignoring the fact that the majority of the Engineering Contractor (Ltd Company) would have multiple sources of Income, and would pay Corporation Tax on profitability.
Subsequently Clients have gained further risks from taking on Engineer Contractors, with the Recruitment Agencies negotiating and controlling any available Contracts using Umbrella Companies. This has led to a dramatic reduction of available Contracts being advertised, therefore reducing the opportunity for Engineer Contractors with UK based Ltd Companies from generating temporary revenues to help their business Models.
What is worse, due to the high profitability of Recruitment Agencies, there number have increased, with the Recruitment Agents involved often do not really understand what skills required by their Clients in specialist sectors like Consultancy Design, Building Services. Subsequently the hiring Director will have to undertake preliminary sorting processes to ensure sufficient experience, before getting to the Interview Stage. This model has just added an increase to overall costs to the harassed Client and a stagnant income stream by the Engineer Contractor/Sub Consultant.
BREXIT has also added further complication for EU Nationals who previously provided Engineering/Sub Consultant Services inside the UK to Consultants/Contractors, concerning their right to freely enter the UK.