IR35 – Off-payroll working in the private sector

IR35 in the private sector

IR35 – it’s a term you may already be familiar with if you operate in the public sector – but in April 2020 the legislation will be rolled out into the private sector as well, meaning change for clients and contractors.

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 this new legislation, 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.

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.

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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