ESM3005 - Introduction: Readership

The legislation works by treating the income of an intermediary, such as a personal service company, as personal income of an individual in certain circumstances. Income, which would normally be subject to corporation tax, may now be subject to income tax under Schedule E/as employment income and Class 1 NICs. As a consequence the legislation may affect different areas of taxation and National Insurance liability.

Status Inspectors are likely to be involved in dealing with the legislation since they may have to decide whether a particular contract is covered by it. However, where the legislation applies, members of staff with other areas of responsibility and experience will need to be aware of how it operates.

For example, it will affect:

• staff in local offices dealing with income tax returns who have to decide whether a deemed payment has been worked out correctly;
• Inspectors who have to decide whether the deduction for a deemed payment has been calculated correctly in a company’s corporation tax return;
• employer compliance staff who undertake reviews of companies.

Members of staff may not have a comprehensive knowledge of all aspects relating to a particular issue or query. It is therefore important that you consult the appropriate person where necessary.

If you need specialist advice about an IR35 issue, help is also available from the PSN Helpline (internal use only). Where more detailed advice is needed then a written submission should be made to the Head Office specialist at PAYE SA & NICs (Technical) Newcastle.