Off Payroll Working (IR35) - Glossary of terms

Off Payroll Working / IR35 regulations

 Off Payroll Working / IR35 regulations is tax legislation that applies where workers provide their services to a client through an intermediary.

Off Payroll Worker

A worker who is engaged off payroll could be either a self-employed worker engaged directly by the University, a worker provided to the University through an agency or a worker engaged through an intermediary. An intermediary in this context is typically someone working as a subcontractor, a sole trader/partnership who provides their services to the University through their own limited company, often known as a personal service company (“PSC”).

Off Payroll Working (IR35) Team

Off Payroll Working (IR35) Team means the University’s central team (Finance/HR) responsible for undertaking employment status determinations of all workers who are seeking to be engaged by the University outside of the main payroll. The team can be contacted using the dedicated email IR35@sheffield.ac.uk

Engaging Manager

Engaging Manager means the individual within the department who has the authority and responsibility for engaging the worker.

Falls within IR35 rules

Falls within IR35 rules means, where the IR35 rules apply (a worker is providing services through an intermediary and the University determines the worker should be treated as an employee) and the PSC is, unusually, engaged as a vendor with PAYE and NICs deducted from payments made to the PSC, for the services of the worker. In such circumstances the University’s preferred approach is for the PSC to provide its service to the University through an agent with the agent accepting the obligation to apply PAYE and NICs to payments to the PSC.

Falls outside IR35 rules 

Where the IR35 rules apply (a worker is providing services through an intermediary), and the University determines the worker is acting as a contractor (rather than in an employment type relationship) the engagement falls outside IR35 rules and the intermediary should be engaged as a vendor (off payroll) to provide the services to the University.

CEST

CEST means HMRC’s Check Employment Status for Tax tool. This is used to determine a worker’s employment status and whether an intermediary arrangement is within IR35 rules.

University payroll

University payroll means the University’s main employees or casual workers payrolls. All payments through University payroll are subject to PAYE and NIC and may also attract pension contributions.

Contractor

Contractor means an individual who works for themselves and chooses how, where and when they work. They can also choose which jobs they accept based on their preferences. A contractor may choose to work via an agency arrangement or a personal service company or even as a self-employed worker.

Agency or Agent

Agency or Agent means a business that provides workers to the University. The agency may engage the workers directly or via another agency or limited company.

Intermediary

Intermediary means an agency or limited company arrangement through which a worker is seeking engagement with the University.

Personal Services Company (PSC)

Personal Service Company (PSC) means a limited company which is owned and run (usually) by one individual. A PSC would be a company in which the worker receives/is entitled to receive ‘chain payments’ from the company for the work undertaken.

PAYE

PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.

NIC

 NIC is National Insurance Contributions, part of PAYE.

If you feel it would be helpful to add clarification of other terms used within the Off Payroll Working (IR35) procedures, please contact IR35@sheffield.ac.uk.