IR35 Rules (The Intermediaries Legislation) – ‘off payroll’ workers

IR35 Rules (The Intermediaries Legislation) – ‘off payroll’ workers

 

HMRC introduced new rules which came into force on the 6 April 2017 which affects how you have to pay contractors who are classed as being 'disguised or hidden employees'. The rules, referred to as IR35 or the intermediaries’ legislation affect Contractors who are engaged and may be seen to be providing a personal service to you.   

As a public body, if you contract workers to provide services for you through their intermediary, you need to decide, not the contractor, if the off-payroll working rules apply. The off-payroll working rules make sure your workers pay broadly the same tax and National Insurance contributions as an employee if they:

•provide services to you through their own intermediary - most commonly a limited company that they control

•would have been an employee if they were providing their services directly to you, the client

The intermediary will normally be the worker’s own personal service company, but could also be a partnership, a managed service company or an individual.

When an appointment has been made you will need to determine the status of the person to determine the payment method. The HMRC online test in the link below is to be used to determine the status of the contractor, the result of which will determine the payment route.

https://www.tax.service.gov.uk/check-employment-status-for-tax/setup

 The outcome will place the contractor either ‘in scope’ or ‘Out of scope’ of the rules

 

 

In Scope

Out of Scope

HMRC test Result

 

  • Classed as Employed for tax purposes
  • Intermediaries legislation Applies to this engagement

 

  • Classed as Self Employed for tax purposes
  • Intermediaries legislation does not apply

Process to follow

Payment via Payroll

Payment via your normal invoice payment process

Actions

 

You will need to take the necessary actions identified below according to your schools arrangements.

Create an order via your normal process to process invoice(s) for payment.

 

Tell the person or organisation you contract with of your determination and if the rules apply. Do this on or before the contract is entered into, or when the work starts if that is later. If you do not tell them of your determination, you will become responsible for paying the tax and National Insurance contributions due.

If the working practices of the engagement change or you negotiate a new contract with the worker, you must make sure that you re-check the rules to see if they still apply.

HMRC will stand by the result given unless a compliance check finds the information provided isn’t accurate. HMRC won’t stand by results achieved through contrived arrangements designed to get a particular outcome from the service. This would be treated as evidence of deliberate non-compliance with associated higher penalties.

 

Paying the Contractor

Bradford Council Payroll Services have the function within their payroll system to process payments to contractors who are in scope of the IR35 rules so that the required deductions can be made and paid to HMRC.

 

Registering your contractor with Payroll

Community schools

For Community Schools to arrange for a contractor to be paid via the payroll system you will need to complete the IR35 – Contractor Payroll Registration - Council and email it to the council’s payroll service at Payroll-ExternalTeam@bradford.gov.uk

You need to complete SECTION 1 and then sign and date it.

Any queries about the Companies House and VAT registration check should be directed to procurement services at strategiccontractsteam@bradford.gov.uk

You must complete and return the Eligibility to work and ID document and retain it for your records.

External schools

For Academies, Foundation and Voluntary Aided schools you will need to complete the IR35 – Contractor Payroll Registration - non council and send via Bradford Schools Online (BSO) to your usual payroll contact.

You need to complete SECTION 1 and then date and sign it.

In both cases once Payroll Services has registered your contractor on the payroll system they will email you with the contractor’s payroll reference number, you will need this to authorise payments to your contractor.

 

Authorising payment to your contractor

You will receive either a time sheet or an invoice from your contractor, you should retain these documents for your own records along with the original result from the HMRC employment status toolkit. To authorise payment you need to complete the IR35 payments form for each contractor and send it to payroll. Please ensure establishment details are completed on the form (top left).

IR35 Payment forms should be sent to your usual payroll contact via BSO.

Please see the relevant documents below which you can download.

 

IR35 Payments request 2017

Eligibility to work and identity check

IR35 contractor payroll registration - council

IR35 contractor payroll registration - non council

 


Page owned by Martin Nelson, last updated on 28/11/2019. This page has been viewed 68 times.