Agency letter to Contractor after Government change IR35 rules

Agency Letter
Agency Letter

Agency Letter

What do you think of this agency letter to a contractor.

Recently the Government changed the rules as regarding how the public sector hire and handle contractors as regards their correct tax status.

Here is a copy of a letter that one agency sent to a contractor. It tells him how the changes affect him.

Letter to Contractor

As previously communicated, following a review in May this year the government introduced new legislation. This requires government departments and their Arms‘ Length Bodies to provide assurance that any ‘˜off-payroll workers‘, including Limited Company Contractors, are meeting their HMRC tax obligations.

The new legislation applies to any contracts of more than 6 months‘ duration. It applies to all ‘off-payroll workers‘ who are paid £220 per day or more. As you may be aware the X have been offering contracts of less than 26 weeks‘ duration in order to achieve immediate compliance with the legislation.

Public Sector Clients

The X is now aligning its contracts, as are all of our other public sector clients. That is on order to have the new legislation adhered to in a timely yet considered manner. X and X have worked closely with the X to establish an efficient process to provide the necessary assurance that Limited Company Contractor‘s tax obligations are met. That’s with every effort being made to try to minimise the impact of these new terms and conditions.

In order for the X to provide assurance that their ‘off-payroll workers‘ are meeting their HMRC tax obligations you are required to do the following things;

1) Undertake a Business Entity Test and provide X with the result/score once complete – please see attached guidance.

The level of assurance which you may be required to provide will be dependent on your ‘Business Entity Test score’ and ‘risk category‘. The outputs of your test and any potential impact will be discussed with you on an individual basis.

2) Sign a revised X Contract

Revised Contractor Terms

Please find attached a copy of the revised X Contractor Terms & Conditions. This is being utilised by both X and X for the entire contractor workforce. We are issuing these terms allowing 28 days for you to review and sign up to these new terms.

If you decide not to agree to the revised terms, our only option will be to exercise our rights under the existing terms and conditions to terminate the engagement. The exact timing of the notice to terminate and the notice period to be applied will be at our discretion. However, it is anticipated termination will occur within 2 months of your decision not to sign up to the revised terms and conditions.

Impact of Revised Terms

Every attempt has been made to minimise the impact of the revised terms. Due to the substantial review undertaken, the X will not accept any further changes to the proposed terms. That’s because they are deemed fit for purpose. Please confirm your acceptance to us in writing to us no later than Monday 19th November at 10:00am.

We will email again on an individual basis tomorrow afternoon providing you with a personalised contract. From there we will contact you over the coming days to ensure you are in receipt of both emails and to answer any questions you may have.

So, what do you think of that agency letter?