The intermediaries legislation—IR35
The intermediaries legislation—IR35

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

  • The intermediaries legislation—IR35
  • Scope of the income tax intermediaries legislation (IR35)
  • Conditions where intermediary is a company
  • The notional contract between the worker and the client
  • Application of IR35 to office-holders (including directors)
  • NICs deeming rules
  • The consequences of IR35 applying
  • Payments to the individual by the PSC subject to IR35

FORTHCOMING CHANGE: on 18 May 2018, HMRC published a consultation which looked at how best to tackle non-compliance with IR35 in the private sector. For more information on the consultation, see News Analysis: Off-payroll working consultation to tackle non-compliance in the private sector.

In its 29 October 2018 budget statement, the government published its response to that consultation. The government announced that it will extend to certain medium-sized and large private sector businesses from 6 April 2020 the changes which it made from April 2017 when applying IR35 to those working for public sector bodies. The 2017 changes shifted to the public sector body the responsibility for assessing whether the worker would be an employee if that person were working directly for the public sector end-user, instead of being contracted to work for a ‘personal service company’ intermediary. Shifting the IR35 exposure so that it falls on the end-user of the worker’s services creates a significant extra compliance burden for those using services provided by workers who act via personal service companies.

In early March 2019, a consultation document was released regarding a number of related matters (eg the meaning of a ‘small’ business for these purposes and improving procedures for determining the tax status of workers). The April 2020 change will not apply to ‘small businesses’. Therefore, where a small