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Due Diligence for Limited Company Contractors

Published 11 months ago by Elkie Holland
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With all the recent new legislation, the REC is recommending their members carry out proper Due Diligence for all Limited Company contractors.

It is suggested that checks are clearly documented and they have a model form which we have adopted.  Most of the questions are pretty straight forward and are things like:

  • Registered Company name
  • Company registration number 
  • Date of Incorporation
  • VAT Number
  • Bank account details
  • Accountants details

However, some contractors have been a little unsure about some of the question so we thought we'd try to help. The easiest is to put the question and then some of the answers we've seen.


TOP 6 QUERIES & POPULAR ANSWERS


IR35

How do you establish IR35 status ? Please provide a copy of the process for establishing IR35 status.  Please provide a copy of any documentation completed as part of an IR35 review for the contractor / temporary work supplied.

Answers here have included reasons / justifications why it's felt it's outside IR35.  Some answers we've had include:

We fall outside as we provide our own equipment and software used to carry out all work in conjunction with this contract and perform 40% of the work from our own premises.

We use the tool on the government website to ascertain if the assignment is inside or outside IR35.


Tax and National Insurance

How does the Intermediary pay the contractor / temporary worker ? 

Popular answer:    Part salary / part dividend.


Travel and Subsistence

How does the Intermediary establish whether it is an MSC for S339A ?

Popular answer for 1-man Limited Company is:  "Check made intermediary is a PSC".


Specific Compliance Requirements

ID Checks

Right to Work checks

Slavery etc

Popular answer:  Checked UK Passport & UK Driving Licence.


Conduct of Employment Agencies & Employment Business Regulations 2003 (the Conduct Regulations

How does the Intermediary (a) ensure that the opt out is validly given i.e. signed by both the intermediary and the individual work seeker ....

Popular answer:  Signed Opt out form via recruitment consultancy.


Working Time Directive

How does the Intermediary calculate holiday pay and holiday leave ?

Popular answer:  As and when required.


PLEASE NOTE

The answers above are not the only answers and are not recommended but are just the most popular answers to the questions that Contractors appear most stuck on.

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