IR35 in the North Pole

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Putting together naughty and nice lists, looking after reindeers and delivering over 526,000,000 gifts all in one night. Phwew. It’s no wonder Father Christmas turns to mince pies and brandy milk.

Whilst festive-fever may not hit the UK until November time, in the North Pole there’s year-round activity and preparation. As such, Father Christmas has several elves on his payroll. It’s the job of these elves to do the day-to-day work to keep Christmas HQ running. Whilst they may have their specific roles, one day they could be looking after reindeer, the next wrapping presents for stockings or moulding candy canes into shape. As employees, these elves receive a holiday allowance, ‘elf insurance, get paid when they’re off sick and get other company benefits such as invitations to annual parties.

However, as December draws nearer, a temporary workforce is needed to cope with the demand and increased activity of busy season. Just like any other business.

This begs the question; what would HMRC make of his practices? Would the Christmas contracts given by Father Christmas be deemed as inside or outside of IR35? How should his temporary workforce structure themselves?

The IR35 Status of Christmas Helpers

Unfortunately, being busy bringing joy to the world means that Father Christmas isn’t the most clued up on the IR35 legislation. Luckily for him, the IR35 experts at Parasol were on hand to look at his temporary contracts and give guidance on whether or not HMRC would deem the contracts as inside or outside of IR35:

Christmas contract #1: Toy Specialists

Whilst the full-time elves work year-round to ensure there are enough traditional toys for children to enjoy (hobby horses, board games, books and - since 2010 - iPads) each year, there are many specialist toys which must be made.

Toy specialists have specific skills in toy mastery. Their contracts specify that they must create a certain number of each toy to the highest quality during their three-month contract. They can work within the Christmas HQ workshop, but as they have their own specialist equipment, they can work from wherever they wish. They do not receive holiday pay, sick pay or any of the benefits which full-time elves receive however due to their specialist skills they can command higher rates of pay. Also, once the contractor has filled their quota of built toys, there is no obligation for them to be offered more work.

IR35 status: Outside. These Toy Specialists have specific skills and as long as they stick to what they’re contracted to do during their time at Christmas HQ, they should have no issues with their IR35 status.

Christmas contract #2: Essential Elves

Whilst there are hundreds of full-time elf employees at Christmas HQ, Christmas is such a busy time that hundreds more are needed on short term contracts around the Christmas period. Essential Elves are hired for pre- and post- Christmas contracts to both help Father Christmas prepare and also to help him with the new year clean-up. Their roles will be varied and may differ day to day.

IR35 status: Inside. As they are providing a support to existing employees and will be doing very similar roles, these temporary workers would be best working through a compliant umbrella solution.

Christmas contract #3:  Father Christmas' Helpers

From mid-November, shopping malls and garden centres around the world play host to Father Christmas so that children and adults alike can discuss their Christmas-lists with the big man himself. As you may or may not know, the majority of these Father Christmas’ are simply helpers who are hired to look, sound and act exactly like the real Father Christmas. Come on, you didn’t think he could be in all those places at once did you?

IR35 status: Inside. Whilst not the be-all-end-all for IR35 assessments, these Christmas contractors are heavily under SDC (Supervision, direction and control) with being told what to do, how to do it and even how to look whilst doing it (curly white beards and rotund tummies are necessities for Father Christmas Helpers). Again, these contractors would be better off working through a compliant umbrella company such as Parasol.

Discover more

Don’t get left with coal in your stocking from HMRC this Christmas. Take a look at our What is IR35? guide and get clued up on the legislation and what it means for you. And if you just so happen to be an Elf or Father Christmas look-alike, don't hesitate to get in touch and see how our compliant umbrella company solution can help you.