Skip to main content
Recrutiment & Employment Confederation

Important update for REC members

Updated on 01 June 2021

As a result of an increase in umbrella company related queries coming into the REC Legal Helpline lately, we have put together this factsheet for members working with umbrella companies. The guide brings together the most frequently asked questions into one factsheet and includes guidance for members on how the REC Code of Professional Practice applies to umbrella company arrangements.

Download the REC Guide to working with umbrellas here.

Last minute technical changes to the off-payroll (private sector) legislation – updates to REC contracts and supporting documents.

The off-payroll rules will apply to the private sector from 6 April 2021. Since the 2021 Finance Bill government introduced some technical changes to the off-payroll rules for workers who provide services through intermediaries where the clients are public authorities or medium or large in the private sector. The changes ensure that the off-payoll rules operate as intended.

 Download the contracts now 

 Download the supporting documents here 

Here's a summary of the changes 

Government has confirmed that there will be changes to the rules:

  • the wider definition of an intermediary will be corrected so that umbrella company workers are not within the scope of the rules.
  • currently the rules apply to contractors, who must have a material interest in the intermediary they work through. Material interest means owning more than 5% of the company; or being entitled to 60% or more of the profits in a partnership. But material interest will change only for companies to include cases where the contractor has less than a material interest meaning the rules will apply if they receive payment that is not deemed employment income and they have any interest in the company.
  • a targeted, anti-avoidance rule will be applied to arrangements where the primary purpose is to gain a tax advantage by circumventing the rules.
  • to make sharing information easier, instead of just the worker, the intermediaries will be obliged to confirm to persons in the supply chain whether the IR35 qualifying conditions are met (in terms of what the worker has been paid).
  • extend the consequences for providing fraudulent information, so where fraudulent information is provided, the liability will be moved to the party in the UK supply chain that provided the fraudulent information.​​​​

HMRC has updated its guidance on how to use the Check Employment Status for Tax (CEST) tool to reflect these changes. 

HMRC has rewritten its CEST tool guidance following the changes to the off-payroll working rules which came into force in April 2021.

The CEST tool can be used to help hirers, agencies and workers decide on the employment status of an individual and, where appropriate, to decide whether the off-payroll rules apply to a contract.

The guidance notes that HMRC will stand by all status determinations given by the tool so long as the information provided was accurate.

As a result of these last-minute changes we have made some amendments to our template contracts and some of our supporting documents.

We advise members to use these versions of the contracts and template documents going forward and here is an explanation of the amendments we have made:

Contract Number

Off-payroll rules apply or don't apply


REC Combined Terms



Contracts 3A, 3C, 4A, 4B, and 4C

Off-payroll rules apply

Definition of Conditions of Liability to include non-material interest and termination clauses.

Contract 3B, 3D, and 4D

Off-payroll rules do not apply, as the clients are exempt

Minor amendment to the introductory notes in the contract (not the contract), to simply highlight minor changes to the off-payroll rules from 6th April 2021.

REC Non-combined Terms



Contracts 5, 6, 7 and 8

Private sector - Off-payroll rules do not apply


Public sector - Off-payroll rules apply 

As these contracts are used for umbrella company arrangements, amendments have been made to definition of Conditions of Liability to include non-material Interest and termination clauses, to reflect rules in the public sector.

Contracts 5A, 6A, 7A, 8A, 9A, 10A, 11A and 12A

Public sector - Off-payroll rules apply 

Amendments have been made to definition of Conditions of Liability to include non-material Interest and termination clauses, to reflect rules in the public sector.

If you require further guidance please contact the legal helpline.


Prepare you business for IR35 changes 

If you missed our webinar series on IR35, you can now purchase a recorded seminar explaining the measures your business needs to take to comply with the new rules.

This seminar is delivered by Bernie Payne of Labolution. Bernie has worked in legal & compliance roles within the staffing industry for over 15 years and has supported agencies and end clients with their IR35 obligations for both the public and the private sector changes. Bernie has been working closely with the REC since she decided to become an independent consultant in early 2019. 

Please note that the recording was made prior to 6 April and the information provided was accurate on the date of seminar delivery. To purchase the seminar recording, contact us on 0207 009 2100 or email.

The session explores in depth: 

  • What clients the rules apply to
  • Status Determination Statements (SDS) - what they are and what's reasonable care
  • Who is the fee-payer and what are their responsibilities?
  • Disagreeing with the client's decision and how to manage this
  • Knowing your liabilities
  • Commercial and practical considerations for agencies
  • Key client-focused activities
  • System and process changes
  • Changes to contracts and T&C's
  • Supporting clients with IR35 assessments

Latest IR35 advice from HMRC and REC

Missed our recent IR35 webinar with HMRC? You can now download the slides containing answers to the following:

  • Which rules will need to be considered from April
  • How the rules intend to operate for different parties in the chain
  • How clients will need to consider a worker’s status
  • How you can prepare for April?
Download the slides now

IR35 changes are coming into effect in April 2021 - here's everything you need to know

The Finance Act 2020 received Royal Assent in July. It includes the previously delayed off-payroll (IR35) changes – this confirms that the IR35 changes will now go ahead on 6 April 2021. From that date, the responsibility for managing IR35 moves away from personal service companies to clients and fee-payers.

  • If your client is a public authority, the rules which took effect in April 2017 remain in place (with some amendments). 
  • If your client is a private sector client, you need to know whether they are exempt from the changes or not. Clients who are small or who have no UK connection will be exempt from the changes - when a PSC provides their services to an exempt client the PSC remains responsible for IR35. Use our exempt client declaration form to ask the client about their status.

Who has to do what? 

If a client is not exempt, it must provide a status determination statement to both the worker and the party it has a contract with. That statement must confirm whether the engagement is ‘inside IR35’ or ‘outside IR35’. If it is an ‘inside IR35’ engagement, the fee-payer (who has the contract with the PSC) must deduct tax and national insurance before paying the PSC. Employers’ national insurance will also be due. If it is ‘outside IR35’ the fee-payer can pay the PSC gross. See our template client status determination statement.


With just one month to go businesses must prepare for the changes. That includes understanding which clients are captured (or not), what roles are filled by PSCs, how clients will make their determinations, who is in the supply chain, what happens to pay and charge rates, how to report payments and what records to keep.

HMRC activity

HMRC have recently updated their Employment Status Manual (in particular look at chapter 8000, 10000 and 11000). This is guidance only but it is useful to understand HMRC’s interpretation of the law. 

There has been some public discussion about how a late change to the off-payroll rules (now in the Finance Act 2020) would affect the use of umbrella companies i.e. that the change might require agencies to deduct PAYE tax and national insurance even where there is an umbrella in the supply chain. REC spoke with HMRC on 14 October and HMRC have released this statement to reassure agencies and umbrellas that where the umbrella company deducts PAYE tax and national insurance, the agency does not have to consider the off-payroll rules.

How can we help you prepare for IR35?

REC members have access to a range of legal resources and business support to help you prepare for the tax legislation that's coming into effect in April 2021.

Legal resources including model contracts, legal guides, factsheets, guides and REC's legal helpline to advise your clients and contractors.

Up-to-the-minute updates from the government and REC's experts to keep you informed of the latest developments affecting your business.

Business support from IR35 experts in the form of virtual seminars, interactive webinars, blogs, podcasts and more.

Extended IR35 support from REC's accredited business partners who specialise in this field.

Our legal resources and legal support are for members only - Join today to access these

If you wish to gain access to our

  • latest template contracts
  • factsheets
  • legal guides
  • legal helpline or
  • member-exclusive discounts from REC's IR35 partners, then become an REC Corporate member today. 

blank profile picture

"So important to be on top of the new rules. I can highly recommend this [IR35 virtual] event which I attended recently. I now have all the REC new contracts in place and being used. Thank you to the Recruitment & Employment Confederation you can always be relied upon for the best advice and support."

blank profile picture Michelle Cryer
Founder and managing Director, MIDASExec
blank profile picture

"Thanks for a great IR35 session. I have to say it was the best IR35 session I have attended, and believe me I must have been at 15 or more. Your presenter Bernie Payne was great, clear and pragmatic."

blank profile picture Kevin Thorn
Director, E-Resourcing Ltd

Advice from REC’s IR35 partners

Meet REC's approved IR35 suppliers

REC's business partners have been selected for their ability to provide relevant, quality services to our members. Here is a list of specialists suppliers who can support with your IR35 needs. 

Specialist legal support when you need it the most

If you're not an REC member, talk to us today about joining our network and start accessing all the help available to prepare for April 2021.