Property & Construction

Compliance with Off-Payroll Working (IR35)

16th October 2023

Who does this affect?

IR35 (Inland Revenue Press Release 35 of 1999) combats tax avoidance in arrangements with intermediaries like Personal Service Companies. Its primary goal is to ensure proper Income Tax and National Insurance Contributions (NIC) payments, treating certain work arrangements as employment for tax purposes.

Since April 2021, non-‘small’ private sector companies have needed to evaluate IR35 rules for their engagements, shifting responsibility from intermediaries.

‘Small’ aligns with Companies Act 2006 criteria:

  • ≤ £10.2M turnover,
  • ≤ £5.1M balance sheet assets,
  • ≤ 50 employees (average during a financial year).

‘Small’ status loss happens after failing two out of three criteria for two consecutive years.

Not ‘Small’? Here’s what to do:
  • Assess employment status for each worker engaged through intermediaries, factoring mutuality of obligation, control, substitution, and financial risk. HMRC offers ‘Check Employment Status for Tax’ tool.
  • Issue a Status Determination Statement (SDS) to workers and supply chain parties after determination. Not doing so retains tax deduction responsibility and allows worker appeals.
  • Demonstrate reasonable care in fulfilling obligations; otherwise, tax deduction responsibility stays with your organisation.

How we can help

We can provide comprehensive support to help you fully understand your obligations under these rules. Our services include:

  • conducting reviews of relevant engagements,
  • preparing detailed reports documenting the findings,
  • assisting in the preparation of SDS documents.

If you would like to know more, please get in touch Click here…