Are the IR35 rules relevant to you?
You do not need to consider IR35 rules unless a PSC is involved. 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 under "Related Documents" below;
· 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 under "Related Documents" below.
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.