Agency Workers Regulations - Swedish Derogation

What is the link between IR35 and the Agency Workers Regulations?

Posted Oct 18, 2011

Just as people were finally getting used to dealing with the complexities of IR35, the introduction of the Agency Workers Regulations on 1st October provided another ambiguous set of rules for the contracting industry to get used to.

One of the many questions the implementation of the Agency Workers Regulations has thrown up involves the relationship between the Intermediaries Legislation (IR35) and the AWR.

The answer is that there is no link between the two pieces of legislation, although if you are found to be within the scope of the AWR, you will most likely be caught by IR35 too.

Limited company contractors who are truly 'in business on their own account' are unlikely to be caught by either set of regulations.

Seb Maley from Qdos Consulting told us:

"Theoretically, if you fail the key IR35 tests and are therefore not in business on your own account, you should fall within the scope of the AWR. However, as with most things status-related, it isn't as clear as that.

"Whilst the tests should be similar, one is looking at tax status and the other employment. AWR isn't policed by HMRC, so the likelihood of getting the same precise opinion is slim.

"The key to AWR is in the reactions of agencies and end clients to the new regulations. We have already seen a whole spectrum of behaviour, some knee-jerk and unhelpful and some intelligent and considered.

"Unfortunately there are some major hirers who seem to want to pigeon hole all contractors, regardless of IR35 status, as being within the AWR scope. This is obviously concerning."

Further Information

You can read our list of helpful AWR guides and resources here.

The Professional Passport AWR guide (PDF) contains some useful FAQs on the relationship (or lack of) between IR35 and the Agency Workers Regulations.

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