The brand-new Chancellor, Jeremy Hunt, revealed that the off payroll working (IR35) guidelines introduced from April 2021 (6 April 2017 for the general public sector) are to continue the same in a turnaround of the proposed repeal revealed by the previous Chancellor, Kwasi Kwarteng. On the basis that the rules won't change, now is a great time to inspect the level of your compliance with IR35 obligations. Particularly as the touch' method to charges for errors that were not intentional ended on 5 April 2022, and HMRC is stepping up its compliance activity. Recap on IR35 responsibilities Under the rules introduced from 6 April 2021, medium or large-sized organisations in the personal and third sectors (leaving out those that are "entirely overseas") have the responsibility for choosing whether plans with 3rd party intermediaries such as Personal Service Companies (PSC) do in truth represent a disguised work. Where an arrangement is considered to be 'inside IR35' on the basis that it is a disguised employment, then the fee payer is accountable for running PAYE/NIC on payments, consisting of employer NIC, and where appropriate the apprenticeship levy. The client utilizing the services of the employee operating by means of an intermediary such as a PSC is likewise needed to fulfill other responsibilities. For example, when the customer has used sensible care and has determined whether the off payroll working guidelines use to an engagement, it is required to interact that choice in the form of a Status Determination Statement (SDS). It is also essential for the client using the services to offer a status argument procedure to deal with any disagreements regarding the SDS and respond within 45 days. Where the customer is specified as a small company by the Companies Act 2006, obligation for assessing the arrangements, and applying IR35 where essential, will remain with the workers intermediary such as the PSC. Common problems and misunderstandings on off payroll working within the social housing sector Now that the IR35 intermediaries guidelines have remained in location for over 18 months, our tax consultants, RSM, are seeing some recurring problems and misconceptions within the sector around the rules, consisting of: Obligations with regard to PSC versus responsibilities with regard to self-employed individuals Whilst work status tests for workers offering services to a customer through their own intermediary such as a PSC are the same as status tests for self-employed employees who are not operating through a PSC, the commitments that you have in relation to each vary and we frequently see confusion around this. As above, obligations, and risk, in relation to making use of PSCs by a medium or big client use from 6 April 2021 just, whereas your responsibility to figure out whether a self-employed employee is truly self-employed for tax purposes have remained in location for many years under different rules. Where you are using the services of a PSC, then you are required to confirm your status assessment in a formal SDS and use a status argument procedure. A formal SDS does not require to be released when a self-employed person is working for you, although ou needs to still examine whether they are genuinely self-employed, and you must keep a record of this. If the status of a self-employed worker who is not operating via a PSC is evaluated and it is determined that they have the functions of work, then they need to be treated as an actual staff member for both PAYE/NIC and employment rights functions. Where a PSC employee is determined as 'inside IR35' then they are dealt with as a 'deemed employee' for PAYE/NIC purposes only and do not instantly have employee 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 emphasise that obligations in relation to assessing work status and IR35 need to be undertaken for sub-contractors as they are for any off-payroll employee. It is only once you have actually determined that the off-payroll worker is outside IR35/genuinely self employed that you can make payments to them under the CIS. In this regard it is frequently neglected that each month-to-month CIS specialist return requires a declaration to be completed validating that the employment status of each specific included on the CIS return has been thought about and it has been validated that they are not in fact an employee or deemed worker. Obligations where workers are sourced through a recruitment agency Similar to lots of other organisations, housing associations frequently source momentary employees through 3rd parties such as recruitment companies. In this circumstance payments are made to the recruitment firm, but it is very important to acquire verification from the agency on a worker-by-worker basis regarding whether the employee undergoes PAYE/NIC by the agency. If the recruitment company is contracting with a worker operating by means of an intermediary such as a PSC and onwardly offering them, then the housing association as the client (i.e the end user of the employee's services) has IR35 obligations, unless it is a little service as defined by the Companies Act 2006. Importantly, the housing association need to think about the status of the worker and release a SDS to both the company that it contracted with and the worker. Failure to fulfill this responsibility can lead to the housing association ending up being accountable for any PAYE/NIC due. Due diligence on the labour supply chain is likewise essential because, outside of IR35, there can be other tax and/or reputational threats if the employee is engaged by a celebration in the labour supply chain who is not correctly running PAYE. For example, where the employee is working for a client in the UK, however is engaged by a party in the labour supply chain based beyond the UK who is not running In summary, in the meantime a minimum of, the off payroll working guidelines are here to stay and HMRC are stepping up their compliance activity following completion of the 'light touch' year for charges. All housing associations should periodically evaluate their compliance in the prominent location of work status. Our tax advisors RSM deal with many housing associations and other organisations with regard to their responsibilities under the off payroll working guidelines and would be pleased to assist with any inquiries. For a preliminary discussion please contact David Williams-Richardson. The Chancellor announced that the off payroll working guidelines introduced from April 2021 are to continue. Now is a great time to check the level of your compliance with IR35 responsibilities.