First there is the original Intermediaries Legislation which has been around since April 2000. This is in chapter 8 of the Income Tax Earnings and Pensions Act, which is referred to as “ITEPA”.
Then we have “Off-payroll”, which is chapter 10 of ITEPA, and this first came into the public sector in April 2017 and applies to the medium and large companies in the private sector from 6th April 2021.
Confusingly both are referred to as IR35, even though there are key differences, which you should know.
Both deal with the concept of a “deemed employee” and seek to understand whether the relationship between the contractor and hirer is really a disguised employment relationship.
And to ascertain whether this is the case, the rules to consider are those set down in “Employment status case law”.
By applying the law we then ascertain the “IR35 status”.
The most common term used for deemed employment is “inside IR35” - but you might also hear “IR35 applies”, “within IR35”, “caught by IR35” or you have “failed IR35”. Likewise, if the relationship is not one of deemed employment then we typically say it is “outside IR35”, or “IR35 does not apply”, you are “not within IR35”, or “not caught by IR35”. Some might also say “passed IR35”.
On the whole, the market appears to have settled down to either “inside IR35” or “outside IR35”.
The pain for contractors and hirers is where the relationship is “inside IR35”.
If you need help with your assessment regime then please book a demo of IR35 Shield