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Defining team roles - HMRC guidelines for IR35

With the new HMRC guidelines coming into force in April 2020 for all medium and large businesses in the private sector, you may be finding it a minefield to navigate through the legislation to understand how it affects you. 

HMRC produced a guideline document which helps to explain, through example, how you can define whether a team member is self-employed or an employee, especially when the boundaries are blurred:

Alan would be considered self employed:

Alan is taken on by a manufacturing firm to design and build a new website. Alan and the firm have agreed a price for the job and when he will deliver the new website. Alan will mainly work at home, using his own equipment to complete the task. Alan is free to work for other clients but faces a contractual penalty if he doesn’t deliver the website on time, to the agreed standard. This represents a significant financial risk to Alan if he fails to deliver the final product as agreed.

Zainab would be considered employed:

The manufacturing firm needs someone to maintain and update the new website. It hires Zainab to work for three days a week, eight hours each day. The firm provides Zainab with a laptop so she can work at its offices or at home with permission. She reports to the head of the IT department and must follow their style guide and format to update the website. The firm is responsible for providing and updating the software Zainab needs to do her work. If Zainab has to work longer than her contracted hours, she will be paid overtime. Zainab can work elsewhere on the days she is not working at the firm, with their agreement.

For more information on what this means for your business, read the document here