Is IR35 relevant to you?

You do not need to consider IR35 rules unless a PSC is involved so, to determine whether a PSC is involved, it is important to understand:

· what amounts to a PSC for the purposes of IR35 – please see the Guidance Note;

· that if your business engages an individual directly (not through a PSC) or you are such an individual, IR35 cannot apply;

· however, although no PSC is used it will still be necessary to decide whether if the individual is in law an employee (not self-employed). If they are an employee, the business will have to operate PAYE; and

· if an individual works through some other type of entity (e.g. an agency or managed service company), other rules - and not IR35 - will or might apply.

It can be difficult to decide whether someone is a “disguised employee” for IR35 purposes. HMCR’s view is not conclusive, but it provides a tool, the Check Employment Status Tool (“CEST”) that you can use to assess employment status. For more detail, see the Guidance Note.

These IR35 pages relate only to IR35 and PSCs: if you are looking at a managed service company (“MSC”), a composite service company, an employment agency or an employment business, you should take legal advice and guidance about tax, legal and other issues relevant to them.