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The new Chancellor, Jeremy Hunt, revealed that the off payroll working (IR35) guidelines introduced from April 2021 (6 April 2017 for the public sector) are to continue the same in a turnaround of the proposed repeal revealed by the previous Chancellor, Kwasi Kwarteng. On the basis that the rules won't change, now is a good time to examine the level of your compliance with IR35 obligations. Particularly as the HMRC 'light touch' technique to charges for mistakes that were not intentional ended on 5 April 2022, and HMRC is stepping up its compliance activity. Recap on IR35 responsibilities Under the guidelines introduced from 6 April 2021, medium or large-sized organisations in the private and 3rd sectors (omitting those that are "entirely abroad") have the duty for deciding whether plans with 3rd party intermediaries such as Personal Service Companies (PSC) carry out in fact represent a disguised work. Where a plan is considered to be 'inside IR35' on the basis that it is a disguised employment, then the fee payer is responsible for operating PAYE/NIC on payments, including employer NIC, and where applicable the apprenticeship levy. The client using the services of the employee operating by means of an intermediary such as a PSC is likewise needed to meet other responsibilities. For instance, as soon as the customer has actually applied reasonable care and has figured out whether the off payroll working guidelines apply to an engagement, it is needed to communicate that choice in the kind of a Status Determination Statement (SDS). It is also necessary for the client utilizing the services to offer a status argument procedure to deal with any disputes regarding the SDS and react within 45 days. Where the customer is defined as a small business by the Companies Act 2006, obligation for evaluating the plans, and applying IR35 where necessary, will remain with the employees intermediary such as the PSC. Common issues and misconceptions on off payroll working within the social housing sector Now that the IR35 intermediaries rules have remained in location for over 18 months, our tax consultants, RSM, are seeing some recurring concerns and misunderstandings within the sector around the rules, consisting of: Obligations with regard to PSC versus responsibilities with regard to self-employed people Whilst employment status tests for workers providing services to a customer through their own intermediary such as a PSC are the very same as status tests for self-employed workers who are not running through a PSC, the commitments that you have in relation to each vary and we frequently see confusion around this. As above, commitments, and threat, in relation to making use of PSCs by a medium or large client apply from 6 April 2021 only, whereas your commitment to determine whether a self-employed worker is really self-employed for tax purposes have remained in location for many years under separate rules. Where you are utilizing the services of a PSC, then you are needed to confirm your status assessment in an official SDS and provide a status argument procedure. An official SDS does not require to be provided when a self-employed individual is working for you, although ou must still examine whether they are really self-employed, and you need to keep a record of this. If the status of a self-employed worker who is not operating via a PSC is evaluated and it is figured out that they have the features of work, then they must be dealt with as a real staff member for both PAYE/NIC and employment rights functions. Where a PSC employee is identified as 'within IR35' then they are treated as a 'considered staff member' for PAYE/NIC functions only and do not automatically have employee status for rights such as pension auto-enrolment. Employment status and the Construction Industry Scheme (CIS) Many housing associations engage with off payroll sub-contractors who are paid via the CIS. It is essential to emphasise that responsibilities in relation to evaluating work status and IR35 need to be carried out for sub-contractors as they are for any off-payroll employee. It is just once you have actually identified that the off-payroll employee is outside IR35/genuinely self used that you can pay to them under the CIS. In this regard it is frequently overlooked that each regular monthly CIS contractor return requires a declaration to be finished confirming that the employment status of each individual consisted of on the CIS return has actually been thought about and it has been validated that they are not in reality a staff member or deemed worker. Obligations where workers are sourced through a recruitment company Just like numerous other organisations, housing associations typically source momentary workers through 3rd parties such as recruitment firms. In this circumstance payments are made to the recruitment firm, but it is essential to acquire verification from the agency on a worker-by-worker basis as to whether or not the employee goes through PAYE/NIC by the company. If the recruitment agency is contracting with a worker operating through an intermediary such as a PSC and onwardly supplying them, then the housing association as the client (i.e the end user of the worker's services) has IR35 responsibilities, unless it is a little company as specified by the Companies Act 2006. Importantly, the housing association should consider the status of the worker and release a SDS to both the firm that it contracted with and the employee. Failure to meet this responsibility can lead to the housing association ending up being accountable for any PAYE/NIC due. Due diligence on the labour supply chain is likewise crucial due to the fact that, outside of IR35, there can be other tax and/or reputational risks if the employee is engaged by a celebration in the labour supply chain who is not correctly running PAYE. For example, where the worker is working for a client in the UK, however is engaged by a party in the labour supply chain based outside of the UK who is not running In summary, in the meantime at least, the off payroll working guidelines are here to remain and HMRC are stepping up their compliance activity following the end of the 'light touch' year for charges. All housing associations should periodically review their compliance in the high-profile location of work status. Our tax advisors RSM work with many housing associations and other organisations with regard to their responsibilities under the off payroll working guidelines and would be pleased to assist with any . For an initial discussion please connect with David Williams-Richardson. The Chancellor revealed that the off payroll working guidelines introduced from April 2021 are to continue. Now is a great time to inspect the level of your compliance with IR35 commitments.