Key takeaways from our second successful PharmaMedic virtual breakfast briefing 28 Apr 2021
We welcomed delegates to our second PharmaMedic virtual breakfast briefing on 22nd April. We discussed issues specifically facing the consultants in our network with two quite different but equally insightful presentations. Our first speaker, Dr Catriona McMahon, Executive Coach and Pharmaceutical Physician, spoke powerfully about challenging ourselves and fulfilling our purpose as professionals and individuals. Our second speaker, Kate Cox, Tax Manager at Qdos Contractor, gave us a timely overview of the changes in the IR35 legislation and the impact on consultants.
As always, we enjoyed a dynamic Q&A after the event, and we summarise a few of the questions below:
What is the role of the mentor in supporting the individual seeking advancement?
A good mentor has been in the position you are aiming towards and understands the skills and insights you need to develop to reach that point. A great mentor should also ideally bring coaching skills to the table. When considering whether to work with someone as a mentor, it is essential to ask ourselves:
- Have they been sufficiently close to where I want to go?
- Are they likely to guide me rather than lead me?
What is the definition of ‘small company’ in the context of the IR35 legislation?
The qualifying criteria for the Small Companies Regime can be found from section 382 Companies Act 2006 onwards. A corporate entity will be medium or large-sized if it meets at least two of the following criteria for two consecutive financial years:
- turnover of more than £10.2 million
- a balance sheet total (assets) of more than £5.1 million
- an average of more than 50 employees
Similarly, a corporate entity will cease to be medium or large-sized if it no longer meets at least two of the above criteria for two consecutive financial years.
How does the IR35 reform apply to clients overseas?
Kate noted that this is a complex and sometimes confusing area. If working for an overseas client with no UK presence, the contractor should determine their IR35 statement. It is however important to note that in order for the IR35 determination to remain with a contractor, the end client can have no UK presence whatsoever. Where an overseas client has a branch for example, in the UK the end client will still be responsible for making the IR35 determination and the UK branch will need to deduct the relevant tax and NI.
What is the meaning of ‘part and parcel’ in the context of IR35 legislation?
This term is related to how integrated a contractor is within the organisation. Contractors who have been with an organisation for a long time tend to become more embedded within the organisation and effectively may be treated in the same way as the client’s own employees. From an IR35 perspective, there should be independence between the contractor and the end client. For further information regarding how this particular test has been viewed by the Tax Tribunals, please see HMRC’s own Employment Status Manual regarding the ‘Part and Parcel’ test by clicking onto the following link; https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm0545
How can consultants without other team members manage the ‘Right of substitution’?
Where consultants have a private limited company in which they are the sole Director and do not have employees, it can be challenging to fulfil the right to substitution aspect. However, many consultants and contractors can set up relationships with other limited company contractors who provide similar services to act as their substitute. It is important to note that where a contractor engages an external contractor to act as a substitute there should no change to the contractual terms and the contractor engaging the substitute must be responsible for paying them.
We will be continuing with our virtual breakfast briefings throughout the year, so do get in touch with your feedback on topics you would like to see us cover. We look forward to welcoming you to another event in due course.
In the meantime, if you missed this event, you can catch up and watch the replay here:
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