Appendix 2
IR35 (off payroll working) rules
Introduction to IR35 rules
This is an HMRC process. It is a piece of legislation that states where an individual would have been an employee if they were providing their
services via an intermediary, such as a personal service company, they pay the same tax and National Insurance (NI) contributions as an
employee.
The Environment Agency, along with other public sector bodies, has to decide if IR35 applies. If the rules apply and we are responsible for paying
the worker’s intermediary, then we must deduct employment tax and NI from these payments and report these payments to HMRC.
Who IR35 applies to
The Environment Agency must consider IR35 if the temporary worker:
provides their services to the Environment Agency through their own intermediary
hires people who provide their services through an intermediary to public sector clients
An intermediary is defined as:
a worker's own limited company - known as a personal service company (PSC)
a partnership
another individual
IR35 does not apply if a temporary work agency or similar third party supplies the worker and:
directly employs and deducts tax and National Insurance contributions from the worker
uses an umbrella company to employ the worker which deducts tax and National Insurance contributions
When and how to use HMRC Assessment
To confirm is IR35 rules apply you must complete th
e HMRC assessment tool prior to the worker commencing with the Environment Agency. You must re-
assess using the tool if the assignment is renewed (extended) or changed (different work).
The outcome of the tool will be:
the legislation applies to this worker (in scope)
the legislation does not apply to this worker (out of scope)
unable to determine the tax status of this worker
An indeterminable outcome cannot be accepted. If the outcome is indeterminate, you must contact the HM
RC by email or phone the helpline on 0300 123 2326.