All change on IR35. Again.

All change on IR35

When it comes to IR35, no decision, it seems, can ever be final.

While the NHS has u-turned on its blanket IR35 policy, Network Rail has revised the IR35 status of its PSC contractors three times over the last few months.

Initially, having used the digital ESS tool to determine IR35 status, Network Rail found that none of its PSC contractors were subject to PAYE. Subsequent guidance post-April though meant they had to reverse this position. However, they were able to exempt anyone whose status had already been determined, for the length of their contract. Now, following correspondence from HMRC, Network Rail has been advised that all of its contractors, present and future (at least for the foreseeable) fall outside IR35.

Clearly, Network Rail is making decisions in good faith and within the remit of the legislation. And it’s good news for PSC contractors working in this sector. But it makes life difficult for those agencies who took a risk-averse approach to IR35 and persuaded their contractors to choose umbrella PAYE instead.

It highlights the muddle caused when the decision whether a contractor falls within IR35 lies with the end-user, but the liability rests with the intermediary. A muddle we hope is corrected soon, preferably before this legislation extends to the private sector.

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