What is IR35?
IR35 is legislation which allows HMRC to collect tax and national insurance payments in the public and private sector where a contractor is considered an employee in all but name. In the private sector, it is the intermediary’s responsibility to determine whether a contractor is within IR35 and to pay the additional tax/NI payments to HMRC which would have been received if the contractor was in equivalent employment. The contractor will not be entitled to holiday pay, paternity/maternity leave or pensions under IR35.
Determining IR35 scope varies by client and placement however the key factors used by HMRC are:
- Will the contractor be carrying out the work personally? Would they be able to send a substitute?
- Does the contractor manage their own work or is this provided directly by the client?
- Will the client control how, when and where the contractor carries out their work? Will the work be undertaken at the client’s office? Will the work be completed on equipment provided by the client? Will the contractor be given an email address under the client’s company and given an internal job title?
We cannot provide advice as to whether a worker is off-payroll or any legislative advice relating to IR35. However you can contact susan.ball@rsmuk.com who will be able to help.
What is an Off-Payroll Worker?
Off-payroll workers are contractors that are deemed in scope of the IR35 legislation and will be subject to Tax and National insurance deductions. For more information please refer to https://www.gov.uk/guidance/understanding-off-payroll-working-ir35
How do I check the status of a worker?
This responsibility falls with you as an agency to check each worker to ensure the correct employment status is applied. Please refer to HMRC's employment status tool https://www.gov.uk/guidance/check-employment-status-for-tax for further guidance.
Please note: InTime only clients will not be able to process IR35 contractors due to the limitations of InTime not having functionality which allows the calculation of tax, NI deductions and there being no connection to HMRC gateway for FPS, RTI and EPS submissions. RSM offers integration with InPay to allow clients full IR35 compliance and seamless payroll processing between both systems. Please contact the Client Account team for more information.