UHY Hacker Young | Chartered Accountants

IR35 – Intermediaries Legislation for Academy Schools

4 March 2020

As most of you will be aware, in April 2017 new legislation came into effect regarding the tax position of workers providing services directly for organisations through an intermediary, such as a limited company, or on a self-employed basis, and who receive payment via invoice.

Academies may have been affected by these changes where they engage workers for tasks which would, in other circumstances, be undertaken by an employee. In an academy this may include arrangements such as a music tutor or a sports coach who is paid via an invoice.

Public bodies such as academies are responsible for determining the employment status of ‘workers’ provided through an intermediary, and for ensuring the correct treatment for tax and national insurance contributions (NICs).

Where necessary, the school should undertake an assessment of the employment status of the ‘worker’. HM Revenue & Customs (HMRC) have developed a tool, based on case law, which should be used to check employment status and can be found here.

If the results from the HMRC tool identify the status as falling within the scope of this legislation, then payments made to the ‘worker’ must be considered as employment. As such, Income Tax and NICs need to be deducted, and where relevant the apprenticeship levy applied.

HMRC has the authority to issue significant penalties if an organisation is not compliant with the legislation.

For more information, please contact one of our academy experts.

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