Could your clients be caught out with IR35 rules?

The responsibility for making IR35 decisions has shifted – what your clients need to know

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Since HMRC introduced IR35 or the off-payroll working rules in 2000 to tackle disguised employment, determining the actual worker status has been very complicated. The rules are applicable when organisations engage workers on a self-employed basis and usually through an intermediary, rather than on an employment contract, so they become a deemed, or disguised, employee.

Since 6 April 2021, responsibility for making IR35 decisions has fallen onto the end client, rather than the personal services company (PSC) or another intermediate organisation providing the worker.

There have been several court cases where taxpayers challenged HMRC for its interpretation and application of the rules. There is no one shoe that fits all, similarly the same rules can show a completely different picture for two individuals who are working in the same industry. Companies (and clients) must do a careful assessment for their workers – not only the written agreement but also the actual practices too.

ACCA has prepared a technical factsheet, Treatment of off-payroll arrangements – IR35 summary, which provides step-by-step guidance and answers to many topical questions, too.