Nova Shield


The recent changes to IR35 in the Public Sector have created a lot of doubt and uncertainty to all parties in the supply chain. By choosing Nova Shield, you can have the peace of mind that ensures that where your contract falls outside of IR35, we can pay your invoices without operating PAYE with no risk of a future IR35 liability.

What has changed?

  • Changes to who decides whether IR35 applies have come into force since the new tax year on April 6th 2017
  • At present this only affects contracts within the Public Sector
  • Previously, it was the director of the limited company or 'Personal Service Company' (PSC) who made the decision as to whether IR35 did or did not apply
  • Under the new arrangements, it is a new entity called the 'Fee Payer' who must make this decision and it is their responsibility to deduct tax and NICs from the invoice if necessary
  • The fee payer is the entity which pays the money across to the contractor's PSC i.e. An employment agency or the public sector body
  • There are further conditions that could make the public sector body the fee payer where they do not provide information to the agency which would help them to make an IR35 assessment

How can Nova help?

We will provide our services as an intermediary and become the 'fee payer' by placing ourselves in the contractual chain in between the agency or end client and that of the contractors. This immediately removes the risk to the agency as they will no longer be deemed to be the 'fee payer'.

Nova will then assess each and every contract and decide whether it falls within or outside IR35. Where we are satisfied a gross payment can be made, Nova will pay the invoice in full less a 3% margin. Where however we feel that the contract falls inside of IR35, we will operate PAYE as required. In these circumstances, it might be more suitable to join our umbrella company as an umbrella employee.

How does it work?

Nova will undertake an IR35 review of the contract and decide whether it falls inside or outside of IR35. Depending upon the outcome of this review, there are a number of options available:

Inside or Outside IR35 Action PAYE Operated?
1 Outside Nova will pay the invoice gross less a 3% margin No
2 Inside Nova will operate PAYE and pay you the net amount Yes
3 Inside Offer umbrella service if this would be more suitable Yes

Once the decision has been made, Nova will supply the relevant contracts between all the parties and then be able to supply the services.

Prior to each payment, Nova will raise an invoice and then upon receipt of cleared funds in our account will then make the payment to the PSC or the umbrella employee using same day Faster Payments.

FAQs

What is IR35?

IR35 is legislation introduced in 2000 to handle the perceived problem of workers who provide their services through their own limited companies, who HMRC believed for tax purposes actually to be ‘disguised’ employees.

Further information in IR35 can be found here https://www.gov.uk/guidance/ir35-find-out-if-it-applies

What is meant by the public sector?

For the purpose of this reform, a public authority means a public authority as defined for the purposes of the Freedom of Information Act 2000 and the Freedom of Information (Scotland) Act 2002. This is not an exhaustive list:

  • Government departments, legislative bodies, armed forces
  • Local government
  • NHS
  • Schools and further and higher education institutions
  • Police
  • Other public bodies (listed in a Schedule including bodies such as The British Museum, BBC, Channel 4)
  • Publically owned companies (wholly owned by the Crown and/or the wider public sector such as Transport for London)

What are the costs of Nova’s services?

Service Pay Frequency Cost
PSC direct payment (inside or outside IR35) Weekly 3% margin on gross invoice. A minimum of £10 to a maximum of £30
PSC direct payment (inside or outside IR35) Monthly 3% margin on gross invoice to a maximum of £130
PSC direct payment (inside or outside IR35) Weekly If gross invoice value < £100 £5
Umbrella payment Weekly £15
Umbrella payment Monthly £60

Where can I find out more information about these changes?

You can find comprehensive information here on HMRC's website https://www.gov.uk/guidance/off-payroll-working-in-the-public-sector-reform-of-intermediaries-legislation#public-authorities