IR35—off-payroll workers—practical considerations for the fee-payer
IR35—off-payroll workers—practical considerations for the fee-payer

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

  • IR35—off-payroll workers—practical considerations for the fee-payer
  • Identifying the fee-payer (and end client)
  • Status determination statement
  • SDS dispute process
  • Deemed direct payment
  • Contractual arrangements
  • Payment practicalities
  • Payroll/accounts
  • VAT
  • CIS
  • More...

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 (which could be the end client which contracts directly with the PSC or another intervening intermediary in more complicated contractual arrangements). This shift creates a significant extra compliance burden 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, can also create an additional cost for clients using workers’ services which are provided through an intermediary.

This Practice Note is based on the rules that come into effect on 6 April 2021. All references to the Income

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