The new Chancellor, Jeremy Hunt, revealed that the off payroll working (IR35) rules introduced from April 2021 (6 April 2017 for the general public sector) are to continue the same in a turnaround of the proposed repeal announced by the previous Chancellor, Kwasi Kwarteng. On the basis that the rules won't change, now is a great time to check the level of your compliance with IR35 commitments. Particularly as the HMRC 'light touch' technique to charges for inaccuracies that were not deliberate ended on 5 April 2022, and HMRC is stepping up its compliance activity. Recap on IR35 obligations Under the guidelines presented from 6 April 2021, medium or large-sized organisations in the private and third sectors (omitting those that are "completely abroad") have the obligation for choosing whether arrangements with 3rd party intermediaries such as Personal Service Companies (PSC) carry out in truth represent a disguised employment. 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 running PAYE/NIC on payments, consisting of company NIC, and where relevant the apprenticeship levy. The client using the services of the worker operating via an intermediary such as a PSC is also required to meet other responsibilities. For example, as soon as the client has actually used sensible care and has determined whether the off payroll working rules use to an engagement, it is needed to interact that decision in the form of a Status Determination Statement (SDS). It is likewise essential for the client utilizing the services to provide a status argument procedure to handle any disputes concerning the SDS and react within 45 days. Where the client is specified as a little organization by the Companies Act 2006, obligation for examining the plans, and using IR35 where essential, will remain with the employees intermediary such as the PSC. Common issues and misunderstandings on off payroll working within the social housing sector Now that the IR35 intermediaries guidelines have actually remained in place for over 18 months, our tax advisers, RSM, are seeing some recurring concerns and misconceptions within the sector around the rules, including: Obligations with regard to PSC versus obligations with regard to self-employed individuals Whilst work status tests for employees providing services to a client via their own intermediary such as a PSC are the exact same as status tests for self-employed employees who are not operating through a PSC, the commitments that you have in relation to each differ and we often see confusion around this. As above, commitments, and risk, in relation to the use of PSCs by a medium or large client apply from 6 April 2021 just, whereas your commitment to identify whether a self-employed employee is really self-employed for tax functions have actually been in location for many years under separate guidelines. Where you are utilizing the services of a PSC, then you are needed to validate your status evaluation in a formal SDS and provide a status dispute process. An official SDS does not need to be issued when a self-employed person is working for you, although ou should still examine whether or not they are truly self-employed, and you ought to keep a record of this. If the status of a self-employed worker who is not operating by means of a PSC is examined and it is figured out that they have the features of work, then they need to be treated as a real employee for both PAYE/NIC and work rights purposes. Where a PSC employee is figured out as 'inside IR35' then they are treated as a 'considered worker' for PAYE/NIC purposes just and do not automatically have worker 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 by means of the CIS. It is necessary to stress that obligations in relation to evaluating employment status and IR35 should be carried out for sub-contractors as they are for any off-payroll worker. It is just as soon as you have figured out that the off-payroll employee is outdoors IR35/genuinely self used that you can make payments to them under the CIS. In this regard it is frequently overlooked that each monthly CIS professional return needs a statement to be completed validating that the employment status of each private included on the CIS return has actually been thought about and it has actually been verified that they are not in truth an employee or deemed staff member. Obligations where employees are sourced through a recruitment firm Much like numerous other organisations, housing associations frequently source short-lived workers through third celebrations such as recruitment companies. In this situation payments are made to the recruitment company, however it is essential to get confirmation from the company on a worker-by-worker basis as to whether the worker undergoes PAYE/NIC by the agency. If the recruitment firm is contracting with an employee operating via an intermediary such as a PSC and onwardly offering them, then the housing association as the client (i.e completion user of the worker's services) has IR35 obligations, unless it is a small company as defined by the Companies Act 2006. Importantly, the housing association should consider the status of the worker and issue a SDS to both the agency that it contracted with and the employee. Failure to satisfy this commitment 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 because, beyond 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 operating PAYE. For instance, where the worker is working for a customer in the UK, but is engaged by a party in the labour supply chain based outside of the UK who is not running In summary, in the meantime a minimum of, the off payroll working rules are here to remain and HMRC are stepping up their compliance activity following completion of the 'light touch' year for charges. All housing associations need to regularly review their compliance in the prominent area of work status. Our tax consultants RSM work with many housing associations and other organisations with regard to their commitments under the off payroll working rules and would be pleased to help with any queries. 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 an excellent time to examine the level of your compliance with IR35 responsibilities.