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Off-payroll Working

Question for Treasury

UIN 173021, tabled on 22 March 2021

To ask the Chancellor of the Exchequer, what assessment he has made of the effect on the mental health of people who are the subject of IR35 investigations; and what guidance his Department has issued to HMRC staff and officials on taking steps to avoid the harassment and intimidation of people subject to those investigations.

Answered on

29 March 2021

The current off-payroll working rules, often known as IR35, have been in place for many years and apply to individuals working through an intermediary, such as a limited company, for clients outside the public sector. Under these rules it is the individual’s intermediary that is responsible for determining their employment status for tax, and paying the appropriate tax and NICs to HMRC. HMRC may conduct compliance checks on these determinations and amounts paid.

All HMRC staff receive training required to perform their duties. This includes training for staff working with customers who require extra support, including supporting those with mental health conditions.

From 6 April 2021, the changes to the off-payroll working rules shift responsibility for determining an individual's status from the individual's limited company to the client organisation engaging them. Any liabilities arising from the application of the reformed rules rest with client organisations or agencies in the labour supply chain.

If the rules apply, it is these parties that are responsible for deducting income tax and employee National Insurance contributions before paying the individual’s intermediary for the individual’s services, as would be the case for actual employees or agency workers

HMRC have outlined how they will support taxpayers in complying with the changes to the off-payroll working rules: https://www.gov.uk/government/publications/hmrc-issue-briefing-supporting-organisations-to-comply-with-changes-to-the-off-payroll-working-rules-ir35.

Where individuals are engaged by small client organisations outside the public sector, their intermediary will still be required to determine their status following the changes to the rules. HMRC’s compliance checks on these determinations will continue to be carried out by staff who have been trained to perform their duties, including where customers require extra support.

Answered by

Treasury