IR35—off-payroll workers—practical considerations for the end client

The following Tax practice note provides comprehensive and up to date legal information covering:

  • IR35—off-payroll workers—practical considerations for the end client
  • Identifying the end client (and fee-payer)
  • Businesses’ overall stance on compliance obligations
  • Ascertaining which engagements are affected
  • End client’s size and UK connection
  • Engaged workers
  • Assigning responsibility within the business
  • Case law developments
  • Status determination statement
  • SDS dispute process
  • More...

IR35—off-payroll workers—practical considerations for the end client

The off-payroll IR35 regime broadly applies where:

  1. from 6 April 2017, a public authority, and

  2. from 6 April 2021, a private sector entity (other than one that is ‘small’ or does not have a ‘UK connection’)

engages a worker via an intermediary such as a personal service company (PSC) and, but for the existence of that intermediary, the relationship between the worker and the end client would be one of employee and employer. The off-payroll IR35 regime shifts the responsibility for assessing whether IR35 applies from the PSC to the end client and, in the event IR35 does apply, the obligation to make deductions in respect of income tax and National Insurance contributions (NICs) is shifted from the PSC onto the fee-payer (ie the party that is closest in the relevant contractual chain to the PSC—this could be the end client if it contracts directly with the PSC, or it could be another intervening intermediary in more complicated contractual arrangements). This shift of responsibility creates a significant extra compliance burden for the end client and, where the end client is also the fee-payer (see below) and is therefore required to operate PAYE and account for employer’s NICs, as well as any associated apprenticeship levy, can also create an additional cost for clients using workers’ services which are provided through

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