Anti-Avoidance ET4B Summary: IR35 intermediaries legislation


IR35 Intermediaries Legislation

Effective date
Originally enacted in April 2000; though HMRC has sought to increase awareness of the measure by issuing ‘Business Entity Test’ guidelines in 2012, and introducing ‘IR35 compliance’ teams.

What is the measure aimed at?
Personal Service Companies (PSCs) i.e. primarily one person who provides their personal service through their own company.

How does it operate?
In simple terms, it tests whether the worker would be an employee of the end user of the service, but for the use of the PSC.

What is the result?
If IR35 applies, the PSC has to apply PAYE/NIC on virtually all income from that contract.

Is there potential for duties to be transferred elsewhere?
No – any IR35 liability rests with the PSC. However it may be more likely that general workers’ and employment law rights will be accrued, if IR35 does apply.

Other matters to consider
In 2012 HMRC announced a series of ‘Business Entity Tests’ (BETs) which would enable PSCs to self-assess whether they are at high, medium, or low risk of an ‘IR35 review’ by HMRC. However HMRC has now confirmed that the BETs will no longer be used from April 2015.


Return to main article

Return to ET4B blog page