IR35 – Off-payroll working in the Private Sector

Whilst the impending IR35 Private Sector reform is now postponed until April 2021, it’s still a complex topic with a great deal of planning and operational change required to ensure compliance.

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What is IR35?

Also known as Intermediaries legislation, or off-payroll working, it’s used by HMRC to identify whether contractors are genuinely working independently from their end client, and not being treated the same as directly employed personnel.

We’ll be keeping this page up to date as the government develop the Private Sector reform, so register your details with us to stay up-to-date.

Frequently asked questions

Click on the questions below to find out more about IR35 off-payroll working.

End client – IR35 FAQ
What is IR35?
IR35, also known as 'off-payroll working', was introduced by HMRC in April 2000 and is intended to combat tax avoidance.
What does this mean for my company?
As the end client you will have a responsibility alongside the fee payer, often the recruitment agency, to assess whether externally contracted workers are deemed to be disguised employees and as such fall in-scope of IR35.
What is a disguised employee?
A ‘disguised employee’ is a contracted worker who fills a position in a company and works under terms that would make them an employee but doesn't pay the corresponding income tax and National Insurance contributions (NIC) that an employee would. Put simply, if the engagement between the contractor & end client looks and feels like employment - then they will most likely be classed as a disguised employee by HMRC and deemed in-scope of IR35.
How can I tell if a contractor is a disguised employee?
It's crucial that processes are developed to fully assess contracted workers to identify whether they fall in or out of IR35 scope. HMRC provides a tool to assess individual scenarios, but if challenged a fully auditable trail must show reasonable care has been taken to determine a contractor's IR35 status.
What is reasonable care?
The IR35 legislation expects individual status determinations to be made on each contractor – identifying whether they are required to pay tax and National Insurance Contributions. If HMRC challenge your determinations, they will be looking to see that reasonable care has been taken to come to this decision – such as adequate staff training and comprehensive processes to show due diligence.
How is IR35 status determined?
There are a variety of areas the legislation considers that affect an IR35 status determination, including – Right of Substitution; Financial Risk; and Supervision, Direction and Control. You can find out more here.
How can I assess my current contractor workforce?
NRL can provide clients with an IR35 contractor workforce review to assess the current characteristics of engaged contractors and identify where processes need to be adapted - providing simple and practical guidance on how to improve contracts and statements of work to accurately engage contractors. To request more information about our IR35 contractor workforce review email [email protected]
Contractor – IR35 FAQ
What is IR35?
IR35, also known as 'off-payroll working', was introduced by HMRC in April 2000 and is intended to combat tax avoidance.
What is a disguised employee?
A ‘disguised employee’ is a contracted worker who fills a position in a company and works under terms that would make them an employee but doesn't pay the corresponding income tax and National Insurance contributions (NIC) that an employee would. Put simply, if the engagement between the contractor & end client looks and feels like employment - then they will most likely be classed as a disguised employee by HMRC and deemed in-scope of IR35.
What does this mean for me as a contractor?
The legislation specifically challenges those people who supply their services to clients via an intermediary, often know as a Personal Services Company (PSC), who in the eyes of HMRC would be considered to be a 'disguised employee' if they are not deemed to be out of scope for IR35.
How will the end client determine IR35 status?
HMRC provides a tool to assess individual scenarios - but if challenged a fully auditable trail will be needed, showing reasonable care has been taken to determine a contractor's IR35 status. It's important to remember that each assignment should be assessed separately, as working practices may vary.
Can I submit my own status determination?
No - whilst you can undertake your own IR35 assessment in preparation, the legislation requires the end client to complete the official status determination.
Can I dispute an IR35 status determination?
Yes, of course. If you feel the status determination given by your end client does not accurately reflect your working relationship, then you can lodge a formal dispute. The end client will have 45 days to complete a disagreement process and report their findings back to you. For more information read our handy article here.
Should IR35 deter me from contracting?
Not at all - it's important to remember that HMRC only expects one-third of contractors to be impacted by IR35. Whilst clients may need to review how they engage contractors, there are simple changes you can make to help ensure you are not deemed to be inside the scope of IR35. We'll be working with our clients and contractors to ensure they understand what changes they'll need to make - but make sure you sign up to receive NRL's latest updates to stay informed.

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