The Housing Community Summit 2025

The brand-new Chancellor, Jeremy Hunt, announced that the off payroll working (IR35) guidelines introduced from April 2021 (6 April 2017 for the general public sector) are to continue the same in a reversal of the proposed repeal revealed by the previous Chancellor, Kwasi Kwarteng.bloglines.com On the basis that the rules won't alter, now is a great time to inspect the level of your compliance with IR35 responsibilities. Particularly as the HMRC 'light touch' technique to penalties for mistakes that were not intentional ended on 5 April 2022, and HMRC is stepping up its compliance activity.bloglines.com Recap on IR35 responsibilities Under the rules presented from 6 April 2021, medium or large-sized organisations in the private and 3rd sectors (leaving out those that are "completely abroad") have the responsibility for deciding whether arrangements with 3rd celebration intermediaries such as Personal Service Companies (PSC) perform in reality represent a disguised work. Where a plan is considered to be 'inside IR35' on the basis that it is a disguised employment, then the cost payer is accountable for operating PAYE/NIC on payments, consisting of company NIC, and where relevant the apprenticeship levy. The client utilizing the services of the worker operating by means of an intermediary such as a PSC is likewise required to meet other commitments. For instance, when the customer has actually used affordable care and has actually figured out whether the off payroll working guidelines use to an engagement, it is required to communicate that choice in the form of a Status Determination Statement (SDS). It is also essential for the client using the services to use a status argument process to deal with any disputes concerning the SDS and react within 45 days. Where the client is defined as a small company by the Companies Act 2006, obligation for evaluating the plans, and applying IR35 where essential, will stay with the workers intermediary such as the PSC. Common concerns and misunderstandings on off payroll working within the social housing sector Now that the IR35 intermediaries guidelines have actually remained in place for over 18 months, our tax advisers, RSM, are seeing some recurring concerns and misunderstandings within the sector around the rules, consisting of: Obligations with regard to PSC versus obligations with regard to self-employed people Whilst employment status tests for workers offering services to a customer by means of their own intermediary such as a PSC are the very same as status tests for who are not running via a PSC, the responsibilities that you have in relation to each vary and we often see confusion around this. As above, obligations, and danger, in relation to using PSCs by a medium or large customer apply from 6 April 2021 only, whereas your obligation to identify whether a self-employed worker is really self-employed for tax purposes have been in place for several years under separate guidelines. Where you are using the services of a PSC, then you are needed to verify your status evaluation in a formal SDS and use a status argument process. An official SDS does not require to be provided when a self-employed person is working for you, although ou must still examine whether or not they are truly self-employed, and you need to keep a record of this. If the status of a self-employed worker who is not running by means of a PSC is examined and it is determined that they have the features of work, then they must be treated as a real employee for both PAYE/NIC and employment rights functions. Where a PSC employee is figured out as 'inside IR35' then they are dealt with as a 'considered staff member' for PAYE/NIC functions only and do not immediately have worker status for rights such as pension auto-enrolment. Employment status and the Construction Industry Scheme (CIS) Many housing associations engage with off payroll sub-contractors who are paid via the CIS. It is necessary to stress that obligations in relation to evaluating employment status and IR35 need to be carried out for sub-contractors as they are for any off-payroll worker. It is just when you have actually identified that the off-payroll worker is outdoors IR35/genuinely self used that you can pay to them under the CIS. In this regard it is often overlooked that each monthly CIS contractor return requires a declaration to be finished confirming that the work status of each individual consisted of on the CIS return has been considered and it has been verified that they are not in fact a staff member or deemed employee. Obligations where workers are sourced by means of a recruitment agency Much like many other organisations, housing associations typically source temporary workers through third parties such as recruitment companies. In this situation payments are made to the recruitment firm, however it is essential to get verification from the company on a worker-by-worker basis regarding whether or not the employee undergoes PAYE/NIC by the firm. If the recruitment firm is contracting with an employee operating by means of an intermediary such as a PSC and onwardly supplying them, then the housing association as the customer (i.e the end user of the worker's services) has IR35 obligations, unless it is a small company as specified by the Companies Act 2006. Importantly, the housing association should consider the status of the employee and release a SDS to both the company that it contracted with and the worker. Failure to meet this responsibility can lead to the housing association ending up being liable for any PAYE/NIC due. Due diligence on the labour supply chain is likewise important since, beyond IR35, there can be other tax and/or reputational risks if the worker is engaged by a party in the labour supply chain who is not properly running PAYE. For example, where the worker is working for a customer in the UK, but is engaged by a party in the labour supply chain based beyond the UK who is not running In summary, in the meantime a minimum of, the off payroll working rules are here to remain and HMRC are stepping up their compliance activity following the end of the 'light touch' year for charges. All housing associations should occasionally review their compliance in the high-profile area of employment status. Our tax consultants RSM deal with numerous housing associations and other organisations with regard to their responsibilities under the off payroll working guidelines and would be pleased to aid with any queries. For a preliminary discussion please get in touch with David Williams-Richardson. The Chancellor revealed that the off payroll working rules presented from April 2021 are to continue. Now is a great time to check the level of your compliance with IR35 obligations.