IR35 was introduced by the UK government to combat concerns that some workers were providing their services via intermediaries who were actually ‘disguised employees’ and thus avoiding income tax and national insurance contributions. IR35 now groups these individuals into two distinct groups, ‘inside IR35’ or ‘outside IR35’, which determine their PAYE deductions and tax accordingly.

 

Employers have recently become increasingly cognizant of this legislation as the legal responsibility for determining whether someone is ‘inside’ or ‘outside’ IR35 switched from the worker to the employer in 2017. Whatsmore, in April (2021) IR35 legislation will be fully implemented across the private sector, aligning it to the requirements of the public sector and passing responsibility from contractors to medium and large businesses. Organisations must be deemed to be taking ‘reasonable care’ when assessing and clarifying workers roles or face significant financial penalties for non-compliance.