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IR35 in the public sector

IR35 in the public sector

HMRC has now started to review compliance with the new IR35 rules.


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Despite the rumours (and wishful thinking), the public sector IR35 changes were introduced on 6 April 2017. HMRC has now started to review compliance with the new rules.

Our experience to date is that HMRC is focussing on:

  • The process for identifying contracts that fall within the rules;
  • How information is being shared with agencies and other 3rd party labour suppliers;
  • How decisions have been made to determine if an engagement requires PAYE/NIC withholding; and,
  • The Employment Status Service (ESS) outputs to make sure questions have been answered correctly and that those using the tool have a thorough understanding of the tests and the terms/conditions relevant to the engagement.

Given the number of stakeholders in an organisation that are involved in the process for engaging, paying and reporting workers on a day to day basis, it is proving difficult for tax and/or finance teams to monitor the effectiveness of the new controls that have been introduced to comply with the new legislation.

We have worked with many public sector bodies and are hosting a webinar at 10.30am on 19 December to share experience to date, you can register here for the webinar.

This post was written by Caroline Laffey, Director Employment Solutions, KPMG in the UK 

For more information, please contact:

Caroline Laffey



T: +44 191 4013849


Michael Wilson



T: +44 191 4013714


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