HMRC has published an employment status checker so that employers can check whether the IR35 legislation on intermediaries and 'disguised employees' will apply to a particular engagement. The tool determines if, on the basis of the facts given, a person is employed or self-employed for tax or NIC purposes.
The IR35 legislation only applies if the worker would be an employee of the entity if they worked directly for it, not an intermediary. The tool can be used to check current or future engagements in the private or public sector.
HMRC affirms that they will stand by the result unless it is subsequently shown that the information provided is inaccurate or contrived to achieve a particular outcome. Currently the tool allows you to obtain an outcome of non-applicability of IR35 legislation if you include a right of substitution in your employment arrangement – which leads to the question of whether always including a right of substitution would constitute a contrived outcome. Due to these mechanical issues, there will be many who question the usefulness of a tool that is so easily manipulated, and who will query the extent to which the tool actually reflects the approach of HMRC for determining employees' status for tax purposes.
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