IR35 - what has changed and what does it mean to recruiters?

IR35: Shutterstock

Public sector IR35 rules are to be introduced from 6 April 2017 under the Finance Bill.

These rules will apply to payments made on or after 6 April 2017 and therefore can apply to contracts commenced before that date.

It will affect workers providing services through an intermediary to a public authority as defined within: Freedom of Information Act 2000 or Freedom of Information Act (Scotland) 2002.

From April 2017, responsibility of assessing worker’s employment status will shift to the public authority, agency or third party paying the intermediary. They will be responsible for deducting and paying PAYE tax or NIC.

The rules will probably apply where:

  • The worker is required to work at the end client’s site 
  • The worker is supplied with equipment by the end client 
  • The worker is directed by a manager or other officer of the public sector body 
  • The worker is leading a team 

To be outside IR35, the worker should:

  • Work mainly from their own office 
  • Provide their own equipment 
  • Employ their own staff  
  • Meet their own costs/ expenses 

HMRC has provided an online assessment tool, but it is anticipated that up to 90% of Single Person Ltd Company workers will be controlled by the public sector organisation, so recruiters need to be aware that they may be responsible for PAYE and NIC.

Some public sector organisations like Transport for London have decided not to use Personal Service Companies.

Jelf can help in the event of an investigation by HMRC, protecting the company from the fees and any subsequent tax losses incurred. For further details contact [email protected] or call 0161 245 1215.

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