Contractor Frequently Asked Questions
At Ford & Stanley, we value strong partnerships with our skilled contractors.
We’ve compiled answers to some of the most common questions you might have. If you need further information, please feel free to question us.
What is IR35?
IR35 is tax legislation introduced by HMRC designed to combat tax avoidance from what HMRC sees as “disguised employment” by individuals supplying services through limited companies, while working in a way that resembles traditional employment.
In HMRC’s view, if a contractor or freelancer is doing the same role, at the same location and doing the same work as a regular employer, they should be taxed as an employee.
Why does it matter?
IR35 is particularly relevant for contractors, freelancers, and businesses engaging with off-payroll workers. Falling inside or outside of IR35 can significantly impact tax you pay and the take home pay you receive.
What is the difference between Inside and Outside IR35?
Inside IR35 means you are considered an employee for tax purposes, paying income tax and National Insurance like a regular employee. Outside IR35 means you are seen as a genuinely self-employed, allowing you to manage your own taxes and benefit from greater tax efficiency.
What can’t I go outside of IR35 or Ltd?
For public sector engagements before 6th April 2017, it is the contractor who would determine whether an engagement was ‘inside’ or ‘outside’ IR35. From this date, it changed to the end client.
For private sector contracts before 6th April 2021, it was also the worker who would determine an engagement’s IR35 status. From this date onwards, it switched to the end client to formalise determination – except in specific circumstances.
What does outside IR35 mean?
As a minimum, Ford & Stanley requires our contractor to have the below cover:
Professional Indemnity Insurance | for a sum of not less than £1,000,000 |
Public liability insurance | for a sum of not less than £5,000,000 |
Employers’ Liability Insurance | where required by statute and at the statutory level of £10,000,000 |
Tax investigation (IR35 Protection) | for a sum of not less than £100,000 and tax liability insurance for a sum of not less than £100,000 including cover for any claims pursuant to the IR35 Legislation [Off-Payroll Legislation]. |
Why do we need insurances?
Contractor insurance requirements come down to one thing: protecting yourself.
Will I be charged for Drug & Alcohol Testing?
As a contractor being paid through a Limited Company, you are liable for the costs of any Medical Assessment, Drug & Alcohol test and further testing required prior to starting.
Recharges will be made by way of invoice which will be deducated from your first week of pay.
Ford & Stanley may also recharge you for the cost of the Medical / Drug & Alcohol test, should you:
- Cancel your booking less than 48 working hours prior to your appointment (be advised that Saturday & Sundays do not count as working days)
- Do not show for your appointment
- Receive a positive Drug & Alcohol result (resulting in a failure)
- Decide to terminate your contract with the first 12 weeks of your assignment start date or do not start the assignment at all
Recharges will be made by way of invoice which is payable upon receipt, or where work has commenced and you are owed funds for hours work, Ford & Stanley will deduct the cost of the test from your first salary payment after we are made aware of your intention to terminate your contract.
The cost of Drug & Alcohol testing ranges from £150 to £210 plus VAT depending on requirements.
What is tax investigation insurance and why do I need it?
It is important to understand that HMRC can open an investigation at any time and they can either look directly at the contractor under IR35 rules, or the end client who is engaging with the contractor under the off payroll working rules. It primarily protects your from costs that can follow an IR35 enquiry.
What is an Umbrella Company?
An umbrella company is an alternative to being paid PAYE by your client or employment agency that is equally safe or compliant.
Therefore, you become an employee of the Umbrella Company and benefit from all the statutory right that go with it.
The Umbrella Company is responsible for all your pay deductions, for example, Tax, National Insurance, Student Loan, etc.
Using an Umbrella Company mean you will not have the worry of setting up and running a company or appointing an Accountant.
Ford & Stanley have an approved supplier list of Umbrella Companies that have been selected for a number of reasons:
- They offer a simple, cost-effective solution that is fully compliant with all HMRC legislative requirements
- They have committed to work closely with Ford & Stanley to ensure that you are paid accurately and on time and to resolve any queries as quickly as possible
Do you have an approved umbrella supplier list?
Ford & Stanley have an established tried and tested Approved Supplier list which aligns with our commitment to being an FSCA Recruiter Partner.
These Umbrella Companies are all trusted partners of Ford & Stanley as well as being FSCA accredited members meaning they are subject to audit.
We recommend that you contact each of the Umbrella companies before deciding which one offers the best service for you.
Who are Ford & Stanley’s approved umbrella companies:
Each provider will charge you a non-refundable fee each time a payment is made to you.
Can I change Umbrella companies?
You can change your umbrella company at any point, however this does dependant on the day of the week.
Please do ensure if you want to change your Umbrella Company you contact timesheets@fordandstanley.com.
We may ask your reasoning for moving Umbrella companies, this is so we can provide feedback to our partners.
How do I opt out of the pension scheme?
To opt out of the pension scheme, all you will need to do it contact your Umbrella company.
Contractor questions
If you have any further questions on the above, please do not hesitate to get in touch via contact@fordandstanley.co