IR35 is a piece of legislation originally introduced in 2000 to ensure those individuals hired by a business, who would ordinarily be deemed ‘employees’ - if they had been engaged directly - broadly pay the same amount of tax and National Insurance as employees. Businesses for many years have always been obliged to undertake the ‘self-employment v employed’ test but IR35 specifically fell on the individual (worker) who provided their services through an intermediary (e.g. through another a company) to another person or entity.
Unfortunately, HMRC do not believe the rules have been followed, resulting in lost income to the Treasury and unfairness, and from April 2017 new legislation was introduced that meant the public sector engaging with a worker became responsible for determining the status of the worker, and from April 2020, this same rule will apply to medium and large private businesses too. Essentially, the criteria for IR35 hasn’t changed, but who the obligation falls upon to assess and report it has.
For those businesses who fall into the medium/large category i.e. two or more of the following: £10.2 million+ turnover, £5.1 million+ balance sheet, 50+ employees, this will mean undertaking a very close assessment of those working on behalf of the business and vice versa. There are added complications too in the way the financial year and calendar year figures are calculated.