Off-payroll working – Big Change from 6 April 2021.
If you have an Injury or Fatality claim involving someone who used a Limited Company structure for their business trade – then their loss quantum may be affected by taxation changes that come into place from 6 April 2021.
The legislation applies to personal service companies also referred to as limited company contractors. These are workers who supply services to an end user via a limited company structure and are both a director of the company and fee-earner.
We have been advising on multiple injury and fatal accident claims involving limited company sole trader contractors.
Colloquially called ‘IR35’ – the latest Government Guidance on IR35 can be found here: https://bit.ly/3vH9B2N
The contractor is either deemed ‘inside’ or ‘outside’ of IR35. If inside then the IR35 rules apply and the impact is that the customer must deduct Income Tax and National Insurance from the sales/fees and pay it to HMRC. Many thousands of ‘self-employed’ workers will be paying more in taxes from this April.
There are also further financial implications from the loss of tax relief on travel and subsistence costs, that the contractor may have paid through their limited company.
“Only certain types of limited company traders are affected so it is important to check if IR35 will impact on the PI loss of earnings/profits claim for your client”
From a Personal Injury Loss Quantum perspective, it is important to consider:
- Whether IR35 is relevant to your client’s business
- The financial impact on their profits/earnings
- What steps your client may take (or would have taken, if the trade has ceased) in response to the IR35 changes
- How their particular marketplace may respond to IR35 – e.g. will pay rates increase, will they convert to employed status (with employment benefits, pension etc)?
We are always happy to give initial thoughts & advice on evidence and approach to loss quantum. Contact us today Richard@FormbyForensics.co.uk or tel. 01761- 437972
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