IR35 is a set of tax rules which form part of the Finance Act. The original part of legislation came into force in April 2000 and is correctly known as the Intermediaries Legislation. IR35 takes its name from the original press release published by the then Inland Revenue informing of its creation.\nIR35 is a term used to define two sets of tax legislation that are intended to combat tax avoidance by workers, and the firms hiring them, who are supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not utilised.\nSuch workers are called \u2018deemed employees\u2019 by HMRC. If caught by IR35, they must pay income tax and National Insurance Contributions (NICs) on a deemed salary as if they were employed.\nIn April 2017 the Government introduced the "Off-Payroll Reforms", which is a separate piece of new tax legislation that applies to the public sector, but which is also referred to as "IR35." These rules are to be extended to the private sector from April 2020.\nThe new Off- Payroll rules present a different a tax treatment, meaning that the paying client will now have to assess the contractor\u2019s status, and pay employment taxes on top of the fees paid to the contractor. This new tax is now usually referred to as the "Off-Payroll Tax".\nIR35 Rules Summary\nIn brief, IR35 involves applying three main principles to determine employment status from the Ready Mixed Concrete case. These are known as the principal \u2018tests of employment\u2019:\n\nControl: what degree of control does the client have over what, how, when and where the worker completes the work.\nSubstitution: is personal service required from the worker, or can the worker send a substitute in their place?\nMutuality of obligation: is the employer obliged to offer and is the worker obliged to accept the work.\n\nOther issues are then taken into account to determine whether you are caught by IR35 include the contract form, whether you are taking a financial risk, if you are \u2018part and parcel\u2019 of the enager\u2019s organisation, being in business on your own account and provision of equipment.\nAll this evidence is considered, and if the balance of probabilities is that the worker is an employee then IR35 applies.\nIf you would like information on our IR35 contract review services or further information on this topic please contact us today.