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Off Payroll Rules in the Public Sector

Q. My question is regarding the Off Payroll rules and their relationship to IR35 if contracting with a Public Sector organisation, as information I have seen on the web seems to be somewhat contradictory and does not clearly indicate if there is any mutual relationship.

In my case my provisional client has undertaken the CEST test for the role that they are engaging a Ltd company contractor for. CEST provides a result that says the ‘Off Payroll’ rules do not apply and the I’ve been given a copy of the result. They are engaging me via an agency who originally advertised the role as outside IR35.

Does this mean that:
A. The role is fully outside of IR35 or just ‘Off Payroll’ as far as the Public Sector organisation is concerned?
B. If HMRC do open a IR35 investigation on this contract who would be responsible for the repayment of tax and NI if the HMRC disagrees with the engager’s use of CEST and its determination. The Public Sector organisation, the Agency or me?
C. If later on, after the contract has finished, will HMRC stand by this CEST result if they open any future IR35 enquiry’s with me and start looking backwards? – HMRC give an assurance that they will stand by the results of CEST provided that the answers to the questions are correct. HMRC can ordinarily go back 4 years, so the CEST results for this engagement may not be applicable to what has gone on before. You should ensure that you have sufficient evidence regarding historical contracts to defend your IR35 position.

Answer to Question A: One & the same. The result produced by CEST will say, ‘The intermediaries legislation does not apply to this engagement.’

Answer to Question B: As this engagement falls within the off-payroll rules then the responsibility for deducting PAYE tax & NIC rests with the end client/fee payer.

Answer to Question C: HMRC give an assurance that they will stand by the results of CEST provided that the answers to the questions are correct. HMRC can ordinarily go back 4 years, so the CEST results for this engagement may not be applicable to what has gone on before. You should ensure that you have sufficient evidence regarding historical contracts to defend your IR35 position.

By Contractor Doctor

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