IR35 and Public Authorities
IR35 for public authorities
HMRC have issued revised guidelines on who falls within the remit of a public authority under IR35. The changes apply from April 2017 and relate to whether the legislation applies to one off payroll contracts.
The guidance can be found below:
Public authorities need to decide whether the off payroll working rules apply and the conditions have been met. They will need to deduct income tax and nation insurance contributions if the worker is paid directly, or advise the agency if the off payroll working rules apply before the contract or work starts.
The definition of a public authority includes government departments,agencies and local authorities, companies controlled or owned by the public sector, schools and universities and the National Health Service.
Where a public authority has fully contracted out services to a third party and the workers do not personally provide their services to the public authority, then the rules would not apply.
A Managed Service Company (MSC) is a form of intermediary company through which workers provide their services to end clients. The worker doesn’t exercise control over the company.
If the worker is providing their services to a public authority through an MSC, the off-payroll working in the public sector rules will apply.