The off-payroll working rules – commonly known as IR35 – are intended to ensure that individuals who work like employees pay broadly the same employment taxes as employees, regardless of the structure they work through. IR35 applies where an individual (the ‘worker’) provides their services through one or more intermediaries (usually limited companies), to another entity (the ‘end engager’).
IR35 was introduced in 2000, with workers (limited company contractors, otherwise known as personal service companies – PSCs) being responsible for making their own IR35 determination and paying their taxes accordingly. In April 2017, the legislation was reformed for those working in the public sector, with the public authorities becoming responsible for deciding whether the worker would have been regarded as an employee for employment tax purposes if they were engaged directly.
In addition, if the worker was deemed to be working like an employee (‘inside IR35’), the entity which paid the worker’s PSC (the ‘Fee Payer’) became responsible for accounting for and paying income tax and NICs under PAYE to HMRC, on behalf of the worker. This was regardless of whether the ‘Fee Payer’ was the public authority itself, or an agent.
As widely anticipated, the following year it was announced that this reform would be extended to engagements in the private sector from 6th April 2020. Estimates of the number of individuals affected range from 170,000 to 900,000 UK-based limited company contractors.
 The one exception is ‘small’ companies, who will not be affected by the reform.