Employment Tax

Anti-avoidance rules ― off payroll working (IR35)

Produced by Tolley
  • 24 Jun 2022 10:27

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Anti-avoidance rules ― off payroll working (IR35)
  • Scope of the rules
  • Intermediary is a company
  • Intermediary is a partnership
  • The notional contract
  • Case law on IR35 and PSCs
  • HMRC guidance on IR35 and particular industries
  • The calculation of tax and NIC ― the deemed employment payment
  • Payment to the individual

Anti-avoidance rules ― off payroll working (IR35)

Many people supply their services to clients via a company rather than directly as an employee of the client or as a self-employed person (sole trader). The tax and NIC advantages of this way of working are significant. See the Personal service companies ― overview guidance note.

Anti-avoidance legislation, referred to in the legislation as ‘provision of services through an intermediary’, known widely as ‘IR35’ and generally referred to by HMRC in guidance as ‘off payroll working’ or ‘the intermediaries rules’, applies to individuals who would be employees or office-holders of their clients if they did not use a service company but were under the same practical contractual terms.

For the purposes of PAYE, an office-holder is treated as an employee, so where ‘employees’ are referred to in this guidance this includes office-holders, see the Establishing employment status guidance note. However, as regards office-holders, the IR35 legislation goes further than the general PAYE rules. Any office-holder ‘who holds that office under the client and the services relate to the office’ automatically falls inside IR35. If so, there is no need to apply the notional contract test for that office-holder (see ‘The notional contract’ below).

Separate legislation exists for tax and NIC. In most cases, both sets of legislation produce the same outcome, but not invariably. See the Off payroll working (IR35) ― particular NIC points and planning guidance note for more information.

Please see the Indirect and

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