The off-payroll working rules, known more commonly as IR35, were introduced in 2000 to tackle what HMRC called ‘disguised employment’. Some contractors and employers took advantage of the tax efficiency of working through a limited company even though the contractor was effectively an employee. This avoided National Insurance costs and saved Income Tax. 

Traditionally it was the contractor’s responsibility to assess their employment status and pay tax through their own limited company as if they were an employee of their employer, although this was not done by many companies. 

There is no set checklist or criteria to deem whether someone is an employee, however the following are normally assessed:

  • Whether there is any obligation to provide work
  • Who has control over the work
  • The ability to quickly and easily hire someone else to do the work instead
  • The financial risk involved for the contractor

Although the legislation has been around for almost two decades, HMRC claimed that levels of non-compliance have been high, with only 10% of those who should be applying the rules doing so.

To combat this, in 2017 there were reforms introduced in the public sector which shifted the responsibility of determining whether IR35 applies to the employer instead.

Despite mixed reviews on the effectiveness of the public sector reforms, Budget 2018 announced an extension of the off-payroll working reforms to the private sector, with the new rules applying from 6th April 2020.

Following on from this proposed legislation, many medium and large businesses are re-assessing their contracts and either employing contractors, cancelling contracts accordingly or implementing IR35 legislation.

We can help you with the new rules by:

  • Identify which engagements will be in scope of the new rules
  • Help carry out status determinations
  • Advise about the IR35 rules and how they operate
  • Help prepare alternative arrangements for certain contractors, where necessary
  • Update software to accommodate payments to contractors deemed within scope of IR35

Get in contact with our team using the enquiry box below or by calling 01474 853 856 if you need any help and advice with IR35.

Want to find out more?

Call us on (01474) 853856 and we will put you in contact with one of our advisers, or send us an enquiry by clicking below.

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