The off-payroll working rules for public sector organisations have been in place from April 2017 and were updated from 06 April 2021. Services must check if the rules apply for any contracts that extend beyond or started on or after 06 April 2021.
The rules apply where a worker provides their services to a client through an intermediary [typically a Personal Service Company (PSC)] but would be classed as an employee if they were contracted directly.
A contract for the purpose of the off-payroll working rules can be a written, verbal or implied agreement between parties.
The off-payroll working rules apply on a contract-by-contract basis. A worker may have some contracts which fall within the off-payroll working rules and some which do not.
When to do an assessment
Services are required to identify any individual who provides services to you that could fall within the scope of the legislation. You should consider:
any individual who provides labour or services to the Council who we pay off-payroll for example through the creditors system on receipt of an invoice
any individual or group of individuals who provide labour or services to the Council through an Agency who are paid by the Agency where we pay the Agency for supplying that individual or group of individuals
- processes to identify any future individuals who work in this way.
How to do an assessment
The Check employment status for tax tool gives you HMRC's view of a worker's employment status, based on the information you provide. It can also be used to check if changes to contractual terms or working arrangements may alter a worker's employment status.
The tool helps you decide:
There must be a contract in place to see whether the engagement is classed as employment or self-employment. The tool assumes there is, or will be, a contract in place.
HMRC will stand by all determinations given by the tool, as long as the information you give remains accurate. You can use the tool again if:
You do not need to know who the worker is to use the tool – you'll still get a result. You can use the tool again when a worker's identity is known. This may enable the tool to provide a determination where the result was 'unable to determine'.
You'll need to know:
- details of the contract
- the worker's responsibilities
- who decides what work needs to be done
- who decides when, where and how the work is done
- how the worker will be paid
- if the engagement includes any corporate benefits or reimbursement for expenses
You may want to view further guidance on using the tool in a separate window to help you while you use it.
Please email firstname.lastname@example.org with subject "IR35 assessment support" and the HR or Payroll team will go through the assessment with you if you need help.
After you've used the tool
You'll be able to:
save and print your answers and result for your own records
use the result as a valid status determination statement when considering the off-payroll working rules – the individual must be advised of the outcome (see below)
You can also add details to the document before you print it.
The tool provides the following determinations based on the information you give:
employed for tax purposes for this work - Goes on Falkirk Council payroll
self-employed for tax purposes for this work - Paid through creditors
off-payroll working (IR35) rules apply - Goes on IR35 payroll
off-payroll working (IR35) rules do not apply - Paid through Creditors
You may receive an unable to determine result. When this happens, the tool will give you further information to help you reach your decision. You can also email email@example.com for assistance.
If IR35 applies, you should keep a copy of the outcome in your local filing system for the contract and also email this to payroll to allow them to set up the contractor on the payroll system.
What to do with the outcome
Tell the contractor (and any agency you engage with) the outcome. You should use the Status Determination Statement (SDS) to tell them. This is a written statement to include the status decision made on an engagement, the reasons which led to this decision (based on the HMRC tool question trace) and right of appeal.
Covering text is available below which must be used when communicating the outcome.
The determination statement must be saved with other contract documents for all outcomes.
How to notify payroll
If the outcome is off-payroll working (IR35) rules apply, you must send this to firstname.lastname@example.org. On receipt of this, payroll will send you a form to complete with the individual's personal details so that they can set up the worker on the IR35 payroll. You must also email email@example.com with the details to enable them to process the payment. Invoices should then be sent to firstname.lastname@example.org.
Right of appeal
If the contractor wishes to appeal, they should put this in writing to the Chief Governance Officer setting out the reasons they believe the determination is incorrect. This should then be re-assessed using the updated information to complete the tool within 45 working days and the outcome notified to the contractor.
The right of appeal is a legal requirement.
Text for covering letter/email
Please see attached the status determination for your current contract with Falkirk Council. This has been determined in line with HMRC Check Employment Status for Tax (CEST) tool.
If you wish to appeal this determination, you should put this in writing to the Chief Governance Officer and email email@example.com setting out the reasons you believe the determination is incorrect.
We will then re-assess this using the updated information to complete the tool within 45 working days and you will be notified of the updated outcome.