The legislation for extending the off-payroll rules into the private sector came into force in April 2021.

HMRC continues to focus on both off-payroll and the umbrella market and all off-payroll reform updates and guidance can be found below.

IR35 Infographic

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Latest news on the off-payroll reform. 

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Off-Payroll working in the Public Sector 

In 2017, HMRC introduced the Off-payroll Rules in the public sector. This legislation imposes an obligation on the Public Sector Body (“PSB”) to inform the party it contracts with on the status of the contractor, and whether or not a contractor would be regarded as an employee or office holder of the end client were it not for the contractor’s Personal Service Company “PSC” being in the contractual supply chain (i.e., inside of IR35). The legislation is clear that the PSB must take “reasonable care” when making this determination. Where the PSB determines that the contractor is inside of IR35 the recruitment company intermediary will be responsible and liable for levying PSC workers’ tax, NICs and employer’s NICs to HMRC.

As part of the changes HMRC has provided an online check employment status for tax tool (“CEST”) to assist parties. 



For FAQs on IR35 see here.


Background Information

APSCo was originally launched as a vehicle to fight the Government’s proposals, first mooted in 1998 and announced in 1999, to tackle tax avoidance through personal service companies – a bill known as IR35.

It came into force throughout the UK in April 2000 and has since been consolidated in the Income Tax (Earnings and Pensions) Act 2003 and in the Statutory Instrument Social Security Contributions (Intermediaries) Regulations 2000, SI 2000/727.

From the outset the measure sparked controversy and APSCo has led the fight to protect the flexibility of the UK labour market and the interests of both independent professionals and recruitment companies.

In the ten years that followed many high-profile court cases were lost by HMRC, and it was clear that the initiative had not delivered the revenue that was originally envisaged. Finally in 2010, shortly after the coalition Government took power, the Office of Tax Simplification (“OTS”) was formed and was tasked with reviewing IR35.

Following the OTS’ report, the 2011 Budget made it clear that the Government would not abolish IR35 legislation, as that would put substantial revenue at risk. However, it committed to making clear improvements in the way IR35 is administered, and the setting up of a forum to monitor the progress made. HMRC invited APSCo to join this IR35 Forum, which first met in May 2011.

In 2017 HMRC introduced the Off-Payroll Rules in the public sector.  

In 2018 the format of the IR35 Forum changed, and the membership was extended to include end client representation. 

IR35 Forum

APSCo is a member of the IR35 Forum, which is a group of external stakeholders who meet quarterly with HMRC. It was established following the government's commitment at Budget 2011 to make clear improvements to the way IR35 is administered. 

The web page of the Forum can be found here, where you can access minutes and other material, as well as see who else is a member. 

Why was IR35 brought in?

The Chancellor at that time, Gordon Brown, stated that the principal aim of the legislation was to prevent workers from setting up limited companies through which they saved tax and NI contributions whilst working, in effect, as an employee.

HM Revenue and Customs could “look through” the contractual arrangement between the worker’s company and the client company in order to spot a “disguised employee”. The fee paid to the worker’s company would then be taxed as if it were a salary and standard NI payments would be applied.