IR35 (Practice News August 2019)
The spectre of IR35 continues to loom over the contractor world and those engaged by the public sector. There have already been several cases heard at tribunal surrounding individuals working for the BBC under their own limited company, otherwise known as off-payroll working, and more cases are expected.
The extension of the off-payroll working rules to the private sector from April 2020 currently remains in place despite some disquiet over its, impact on those affected and its implementation at the same time as the country is dealing with the aftermath of Brexit.
HM Revenue and Customs (HMRC) provide an online service called CEST (Check employment status for tax) which uses a question and answer methodology to give HMRC’s view on employment status.
CEST will give an opinion as to whether IR35 should apply; if off-payroll working is appropriate for both public and private sector engagements or if the worker should be taxed via the PAYE system.
The result given by CEST will be accepted by HMRC unless a subsequent check finds that the question and answer process was contrived.
It is worth remembering that employment status should technically be reviewed for each engagement since circumstances could vary between different pieces of work and contracts.
The onus for off-payroll working is on the engager, or agency if appropriate) to carry out the review process but a worker providing his or her services can also use CEST.
It is probably fair to say that HMRC believe that many have paid lip-service to the IR35 rules over the years and the move to the off-payroll rules is designed to increase employment status compliance. HMRC may have, arguably, not had the manpower resources or the inclination in the past to look into what was a self-policing of IR35 but there is every sign that those days might be over.
– Ian Kelly, Tax Partner
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