Off-payroll working in the public sector.

Off-payroll working in the public sector.

The rules that apply to workers who provide their services to a public authority via their own limited company changed from 6th April 2017.

Previously the obligation was on the worker to decide whether a contract performed was caught by the ‘intermediaries legislation’ (known as IR35) however since the 6th April 2017 it is the responsibility of the public body or agency supplying the worker to the public body to decide if the ‘intermediaries legislation’ applies.

IR35 is tax legislation introduced to identify what is known as ‘disguised employees’, these are workers who would be considered employees of the client if it were not for the existence of their personal limited company.  From the 6^th April 2017 if a public sector client deems your contract to be caught by IR35 legislation then they are required to deduct PAYE tax and Class 1 National Insurance from your invoice before paying it. They are also required to pay Employers National Insurance over to HMRC.

What steps should you now take?

1. You should review all your contracts and see whether any end clients are public bodies, this would include not only government departments but also companies controlled by the public sector, universities, local authorities, parish councils, the BBC and the National Health Service.
2. If you do undertake work for a public sector client, then you should contact the client and ask if they have made a determination as to the status of your contract and how they intend to proceed if they have deemed your contract to be inside the IR35 legislation.
3. Consider seeking professional advice to consider what your options are and how this may affect your limited company moving forward.