IR35 - Off payroll working

What is IR35 – Off payroll working?

The off payroll working rules (IR35) can apply if a worker/contractor/freelancer/consultant that you engage provides a service through either their own limited company or another type of intermediary to the council.

Examples of intermediary are:

  • the worker/contractor’s own personal service company or another personal service company
  • a partnership
  • an individual
  • Recruitment/Consultant Agency
  • Umbrella Companies

The purpose of the IR35 legislation is to ensure that all contractors/workers working in an organisation, in the same way as permanently hired staff would pay the same Tax and National Insurance contributions as an employee.

How does IR35 affect me when I am engaging an individual or an intermediary?

If you use an individual or intermediary to undertake a service within your school, you as a manager will be classed as the engager and will be responsible for determining if the off payroll working rules applies by completing the CEST tool, questionnaire and issuing the status determinations when required.

We strongly advise that no payment should be made until the Council Payroll team has received satisfactory evidence that Employment Status for Tax has been determined.

Please follow the IR35 Process flow and complete the Check Employment Status for Tax (CEST tool) and send the outcome to [email protected].

If the engagement is through a recruitment agency/consultancy you will need to ensure the following:

  • You have a record of all the individual engagements and the relevant agencies
  • Ensure that you have a contract in place with the agency that states that PAYE will be operated
  • Where no PAYE is being operated that the agency will liaise with the school to determine the employment status and carry out any IR35 status determinations
  • Send a copy of any CEST results and Status determinations to the Payroll Service Centre

When should the CEST Tool & Questionnaire be carried out?

This should be carried out before the individual is engaged or carries out any work

When do the changes take place and what happens if I have already engaged an Agency, intermediary, individual or other company?

From 6 April 2021, a status determination statement will need to be completed and issued for any worker/ contractor etc that continues to provide a service past this date. If a service is due to expire before 5 April 2021 and there is due to be no continuation of service, then no further action will be required.

For payments made after 5 April 2021 a new Check Employment Status for Tax (C.E.S.T) will be required, once this has been received you will be required to complete and issue a status determination statement, a copy of the completed form should be sent to the payroll team at [email protected]. Once the council payroll team has agreed the status you will be advised to send out the status determination status to the individual or intermediary.

We strongly advise that payments should not be made until this process is complete.

What happens if the council and the intermediary don’t agree on the Status Determination Statement?

Please follow the disagreement process in the documents below.

How can I find out more information or get more advice about the process?

You can visit https://www.gov.uk/guidance/understanding-off-payroll-working-ir35

For clarification of terms used within this page.  

By contacting the payroll team at: [email protected]

Further information

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