Off-payroll (IR35) ― the notional contract

Produced by a Tolley Employment Tax expert

Employment Tax

Guidance

Many people supply their services to clients, not directly as a self-employed person, but via a company. The tax and NIC advantages of this way of working are significant. See the Off-payroll working (IR35) for small clients ― overview guidance note.

There is anti-avoidance legislation, known as ‘IR35’, in place which catches individuals who would be employees or office holders of their clients if they did not use an intermediary, see the Establishing employment status guidance note.

This guidance note addresses how particular terms in a contract affect the likelihood of the off-payroll working (IR35) rules applying.

For further reading on the intermediary, see Simon’s Taxes E4.1005.

What is an intermediary?

The legislation uses the term ‘intermediary’ for the person between the worker and the client in the contractual chain. Often this intermediary is a personal service company (PSC), but services provided via any set up, including the intermediary being a partnership or another individual are also within the rules.

The contracts

The off-payroll rules (IR35) apply where a contract of employment or a

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