IR35 legal requirement for schools / governor monitoring of compliance

Since April 2017, it is a legal requirement for public sector organisations to determine whether a worker is inside or outside the IR35 legislation. This determination must be undertaken prior to the worker being engaged.                                 

This requirement includes schools and it is recommended that each school appoint a dedicated person to manage IR35. Schools can easily determine the IR35 status of a worker by completing HMRC's Check Employment Status for Tax (CEST) online questionnaire

Where the rules apply, the School is required to calculate Income Tax and National Insurance contributions (NICs) and pay them over to HMRC. These amounts will be deducted from the intermediary's fee for the work provided. HMRC is likely to pursue this legislation robustly for the increased revenue and NI. The school will be liable for any non-compliance - this will include not just the additional tax/NI but also potential fines. There is also the likelihood of a full tax audit, as well as reputational damage to the school and the employer if you are not compliant. 

Schools are reminded that the Governors should be briefed on IR35 legislation and the approach the school takes to ensure compliance. Further guidance from HMRC can be found here.

The local authority finance team will request assurance within the year end returns for schools to confirm that they are IR35 compliant.