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?
RSM have provided a seminar to our clients covering what is IR35, the main challenges as clients and how payroll fits into IR35. You can watch the seminar in full below.
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 Understanding off-payroll working IR35
RSM and IR35
Whilst the InTime Support Team cannot provide advice as to whether a worker is off-payroll or any legislative advice relating to IR35, RSM's employment law specialists are able to offer guidance on managing IR35 compliance and professional services. In addition to this, RSM offers a compliance software solution. Insight4GRC™ is a governance, risk and compliance software (GRC) suite providing management teams with the critical tools needed to be more effective. It enables the monitoring and controlling of performance, tracking of assigned actions, enables employee awareness and facilitates company policy acceptance.
Please visit the Insight4GRC site for more information on our services and how to get in touch with our IR35 specialists at RSM. You can find a short video on how RSM and Insight4GRC can help your organisation with IR35 below.
InTime and IR35
For information on how to process IR35 contractors through InTime and InPay, please refer to our guide here.
Please note: InTime only clients will not be able to process IR35 contractors. InTime does not have functionality which allows the calculation of tax, NI deductions and there is no connection to the 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.
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 Check Employment Status for Tax (CEST) for further guidance.