2017 changes to the application of IR35 for contractors in the public sector has meant that recruitment agencies have become far more involved in the application of the intermediaries legislation.
The amendment to the IR35 legislation, often referred to as the ‘off-payroll working rules’ was implemented from April 2017 after being announced in the 2016 Autumn Statement. Whilst previously the determination of employment status for tax purposes was the responsibility of the limited company contractor, this was passed from April to the end user.
Whilst it is the end client’s duty to determine the IR35 status of the workers engaged to them under the new rules, the financial liability and responsibility for applying IR35 lies with the fee-payer, which will usually be the recruitment agency.
These rules are also to be extended to medium-large private sector businesses from April 2021, which will also see some amendments for the public sector – See IR35 Changes Explained for more information