IR35 & PSC Guidance

If you would like to know more about how Gilbert Tax can help please call our IR35 specialist Craig Tully on 0800 734 3333 or email craig.tully@gilberttax.co.uk

IR35 (Off Payroll Working Regulations)

From April 2020 the Off Payroll Working Regulations will come in to force for private companies, where previously the regulation only applied to public bodies.

The Off Payroll Working Regulations, commonly referred to as IR35, relates to workers operating though a Personal Service Company (PSC). A personal service company is broadly a company where the worker provides personal services to an end user through that company. The definition is quite wide and can include businesses which are more than a ‘one-man band’ operation.

The introduction of these regulations transfers the responsibility of the determination of ‘inside’ or ‘outside’ of IR35 to whomever pays the PSC, previously the PSC was legally required to determine that if it was ‘inside’ or ‘outside’ of IR35, although in many cases the PSC would ignore the requirement to make this ‘self-assessment’

If the worker is ‘inside’ IR35 the tax and NIC must be deducted from payments before they are made to the PSC, the tax and NIC is paid over to HMRC and then the PSC claims credit for the payments against its tax liabilities.
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So who is the payer?

In broad terms anyone who pays for services or receives services from a PSC are categorised as within the scope of the scheme for IR35 purposes, in the following example all of the people in the chain would need to take some action with regard to IR35:

What do I need to do if I pay or I am in the payment chain for a PSC?

There are slightly differing requirements depending on whether you are an end user or an intermediary, common factors are:

• You must have a system in place to identify and monitor PSC you pay either directly or via an intermediary
• There must be an assessment process to decide if the PSC is inside or outside of IR35
• Once the assessment is completed then it is a requirement that a Status Decision Statement (SDS) is issued to the PSC and any intermediary setting out the decision
• If the PSC is inside IR35 then Tax and NIC must be deducted at the rates specified in the regulations and the Tax & NIC paid over to HMRC
• The PSC may appeal against the process and then you have 45 days to deal with the appeal and provide reasons for upholding or altering your decision
• Further monitoring must take place to check if there have been any changes in terms or conditions that move PSC either inside or outside of IR35

It follows that there needs to be more than a one-off exercise, but new starters need to be checked and a process of checking existing workers needs to take place on a regular or risk assessed basis.
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How can Gilbert Tax help if you are the payer?

We have a comprehensive knowledge of IR35 and can assist with almost any issue, such as:

• Dealing with a HMRC investigation or dispute
• Setting up processes to control IR35 and demonstrate compliance with the system
• Carry out a risk assessment for your business
• Assist with SDS notices and issuing them to the PSC
• Review contracts and advise on possible areas where changing working arrangements may bring the PSC outside of IR35 and instruct Counsel where appropriate to assist
• Run the appeals process for you
• Assist with worker education
• Assist with setting up finance function that can manage IR35 deductions
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How can Gilbert Tax help if you are the PSC/worker?

We have a comprehensive knowledge of IR35 and can assist with almost any issue, such as:

• Dealing with your appeal against the SDS
• Provide advice and assistance in the consequences of IR35
• Assist with changes in working arrangements which may bring your PSC outside of IR35
• Deal with and HMRC enquiry of dispute
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If you would like to know more about how Gilbert Tax can help please call our IR35 specialist Craig Tully on 0800 734 3333 or email craig.tully@gilberttax.co.uk