Changes to the Off-Payroll Working Rules (IR35)   

If an end client is receiving services from a worker through their intermediary, are they prepared for the Off-Payroll Working Rules which have been deferred until 6th April 2021?

From 6th April 2021 it will be the end client who bears the responsibility to make an assessment of the working relationship between the client and the individual worker (you) to determine that if there was no intermediary would the status of the worker would be that of an employee of a self-employed individual for tax purposes.

If your status as the individual is deemed to be that of an employee then the client would be compelled to make payroll and NIC deductions in addition to meeting employer NIC.

‘Status Determination Statement’ (SDS)

Under the new off-payroll rules the end client will be required to issue a SDS before any payments are made after the 6th April 2021 or any services are provided. Failure to comply and issue a SDS in respect of the you as the individual could leave you the end client picking up the tab for payroll and NIC deductions as a direct result.

Check Employment Status for Tax (CEST)

HMRC have updated their Check Employment Status for Tax (CEST) tool, which subject to no manipulation in order to achieve a favourable outcome, HMRC has agreed to be bound by such a determination. CEST is HMRC’s own online questionnaire from which an end client can determine the IR35 status of an individual.

Central to a CEST determination will amongst a number of factors be whether an individual has an unfettered right of substitution and the level of mutuality of obligation between the parties.

A SDS needs to be made in writing, provide reasons for the decision and be carried out using ‘Reasonable Care’. If Reasonable Care isn’t used during their decision-making process, the responsibility for deducting tax and NICs will remain with the end client.

So, what is ‘Reasonable Care’?

HMRC have recently published guidance which contains examples of behaviours that would indicate ‘Reasonable Care’ has been taken, which includes:

accurately applying and keeping a record of the employment status principles (ESM0500);

• accurately completing HMRC’s Check Employment Status for Tax (CEST) tool;

• applying HMRC guidance on determining status;

• seeking the advice of a qualified, professional advisor;

• having someone with a good understanding of the work to be undertaken involved in the determination process;

• checking existing individual determinations to ensure they remain valid / accurate;

• reviewing the processes being applied and amending for future determinations where necessary;

• if there are any material changes to a worker’s terms and conditions, or working practices, making a new status determination; and

• checking and reviewing processes of other parties where one party subcontracts the determination process to another party. The client remains responsible for the accuracy of the SDS even if it subcontracts that responsibility to another party.

HMRC’s guidance also provides examples of behaviours which would not constitute ‘Reasonable Care’, which include but are not limited to:

• determining that every worker who provides their services through an intermediary is caught by the Off-Payroll Rules without giving any consideration to the specific facts of each individual case;

• determining that the Off-Payroll Rules apply to a large group of workers who have some variations between the work that is being carried out, without giving proper consideration to the different working arrangements for each individual;

• failing to reconsider determinations where there has been a material change in circumstances;

• an absence of any proper support or training within the organisation to enable those individuals responsible for making determinations to accurately consider the Off-Payroll Rules;

• inputting inaccurate information into CEST;

• failing to take account of all relevant evidence;

• the person tasked with completing the SDS does not possess the knowledge required to complete it and is not provided with the required level of support; and

• the client subcontracts the SDS process to another party and does not confirm the accuracy of that conclusion and the reasons for it.

So, what steps should an end client be taking to be ready for 6th April 2021?

• They should carry out an audit in good time of all existing arrangements they have with their contractors or with any agencies.

• Review the new Off-Payroll Rules and how they could impact their business.

• Put in place robust processes for making a SDS using CEST and seeking specialist advice;

• Keep written records and any corresponding documentation of how they have arrived at the SDS.


As the guidance states the major shift in the legislation is that: The responsibility for deducting tax and National Insurance is the end client’s until they tell the worker and the person or organisation they contract with of their determination and the reasons for it. If the working practices of the engagement change or they negotiate a new contract with the worker, they need to make sure that they re-check the rules to see if they still apply. An engagement is the specific contract or piece of work that a worker is undertaking. For each engagement, whether the off-payroll working rules apply is determined by the terms and conditions and working practices.


• Please note – this guidance is not intended to be taken as legal advice – for individual situations you will need to take specific legal advice.

• The information in this guide is correct as of November 2020 and should be read alongside the government’s specific guidance:

April 2021 changes to off-payroll working for clients – GOV.UK (

Check employment status for tax – GOV.UK (

Andy Boyde, Employment Solicitor – Consilia Legal