The following Tax guidance note provides comprehensive and up to date legal information covering:
This Practice Note explains the anti-avoidance legislation that applies where an individual worker provides services to an end client through an intermediary, such as a personal service company (PSC) or partnership, in circumstances where the individual would otherwise:
for income tax purposes, be regarded as an employee or an office-holder of the end client, and
for National Insurance contributions (NICs) purposes, be regarded as employed in employed earner's employment by the end client
other than where the end client is, from April 2017, a public authority or, from April 2020, a medium or large private entity (for which, see Practice Note: IR35—off-payroll workers).
This legislation is known as the 'intermediaries legislation' or, more commonly, 'IR35' (after the reference number of the HMRC Press Release announcing the rules in Budget 1999).
Before IR35 was introduced, individuals could avoid being taxed as an employee on payments for services by providing those services through an intermediary. By receiving dividends (rather than salary) from the intermediary (usually a PSC), the individual would not be liable for NICs and PAYE would not have to be operated. For more details of the potential income tax and NICs advantages of personal service companies, see Practice Note: Personal service companies—the key benefits and key tax considerations.
Where the relationship between the worker and end client would have been
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