ECH13300 - Particular Occupations: IR35 Service Company – Compliance Check

RIS will identify certain cases related to the IR35 legislation. The majority of the employers affected will

• be companies with just one or two directors and
• have home to work and other personal expenses as a particular feature of the case.

Other potential IR35 cases may be identified during a compliance check or be referred to check the deemed payment calculations.

The fact that the legislation applies to a particular engagement does not mean that it necessarily applies to all engagements.

You should

• complete an intervention plan
• see ECH13350 and ESM3145 re-checking the deemed payment calculation as part of the operation of PAYE
• check that the appropriate distinction has been made between the company's and the director's financial affairs
• make it clear any questions asked are
• for the purpose of establishing the correct status in relation to the IR35 Legislation
• about the entries on the employer's end of year returns and
• not about entries on the company tax return or individuals' income tax returns
• report any irregularities as indicated at ECH13340.

You are not expected to undertake detailed analysis of contracts in IR35 work (this should be done by the EST (Local Compliance) or the Status Inspector (LBS) but you should

• request sight of contracts between the personal service company and end clients/agencies, and
• any relevant documents detailing the terms and conditions governing the work
• review the contracts in place to
  
  
• • establish the nature of the relationship between the personal service company and the end client’s business, and the day to day working arrangements
  • ensure the circumstances in which the duties are undertaken for the client are examined and
  • they are not just accepted at face value.

In many industries, particularly where an employment agency is involved, standard agreements are used. They may not contain enough information to show whether the IR35 legislation applies. You should

• request sight of any contract between the agency and end client, often referred to as the ‘upper level’ contract
• check that any agreement is adhered to and
• find out what the parties to the relationship understand are the true terms and conditions where
  
  
• • the agreement is not adhered to or
  • there is insufficient information within the agreement.

Where employment status is an issue

• see ECH13345.

• (This text has been withheld because of exemptions in the Freedom of Information Act 2000)(This text has been withheld because of exemptions in the Freedom of Information Act 2000)