Promotional material

Considering the requirements of a new role (part 4)

Updated 15 December 2023

Read Purpose, scope and background (part 1) of these guidelines, if you have not already.

You should read these guidelines alongside existing off-payroll working guidance. They are not designed to be used in isolation, or to create an end-to-end process for organisations to comply with the rules.

Your organisation should apply the guidelines to reflect the complexity and scale of your own off-payroll working engagements. Use these guidelines to help make informed decisions, based on individual circumstances.

Give feedback on these guidelines using the survey we’ve created.

Considering the role

Your organisation needs to think about how the off-payroll working rules apply, at all stages of an engagement.

This part of the guidelines covers the point from which you are considering recruiting and advertising for a worker, through to interviewing and securing a worker for the role.

At every stage, your organisation needs to have robust processes in place to make sure you:

• identify individuals who are working through their own intermediaries
• understand whether the role advertised is likely to result in an engagement that will be deemed as employed (inside the off-payroll working rules)

From the start of the process, you should be ready to show you have:

• made an informed status determination
• taken reasonable care

The information you use to advertise the role and the steps that follow are very important. They’ll help you obtain the information you need to make the correct status determination.

Read more about reasonable care in HMRC internal manual ESM10014.

Advertising a role 

Before you advertise a role, all the relevant stakeholders in your organisation should discuss it in detail.

This could include members of HR, and the management team for the role you’re advertising. It may also be helpful to include members of your tax team.

They should all understand the tasks required of the role, and how these apply to all employment status indicators.

This information should feed directly into the process for making status determinations.

For example, one factor is the level of control the organisation will have over the worker, such as whether they need to work from set locations, or within set business operating hours. You’ll also need to take other factors into account, to make sure you’ve considered all the status indicators. This is very important, since these factors will help you make your status determination.

This is the same requirement that you already have, when considering the employment status for tax of workers that do not supply their services through their own intermediary.

Read more about considering all the status indicators in HMRC internal manual ESM0515.

Sometimes, an indication of whether the role is expected to be employed or self-employed for tax purposes is included in the advert for the role.

If you decide to include this in your advert, you should make it clear that if the off-payroll working rules:

• do apply (sometimes referred to as ‘inside IR35’), the worker will be employed for tax purposes
• do not apply (sometimes referred to as ‘outside IR35’), the worker will be self-employed for tax purposes

You should also make it clear that you’ll revisit the determination once you’ve carried out the onboarding process, and assess whether there are any changes to the anticipated contractual terms or working practices. 

Where there are changes, make sure you reflect these when you make the status determination and produce the status determination statement. This should be the version you pass on to the worker and, if applicable, the next party in the supply chain.

Filling the role

You’ll need to consider how you want to fill the role. You may decide to use a third party to provide the worker, like a recruitment agency. If you do, it’s important that you brief the agency filling the role on the outcome of your initial employment status determination.

If you decide you do not want to engage workers through their own intermediaries, be clear when you communicate this to agencies.

For example, do not rely on terms such as ‘outside the rules’, if you mean that you will not engage workers through their own intermediaries. This could cause confusion — people may think that the role being advertised is self-employed for tax purposes. 

Where workers do not provide their services through their own intermediary, the agency legislation may apply. Read HMRC internal manual ESM2000 for more information about agency legislation.

Throughout any interview process, you should record, store and consider any information that’s likely to impact your status determination. This should include:

• information about the working practices
• the terms and conditions of the contract

You should consider whether you already have a role-based determination that fits the requirement of the vacancy. A role-based determination is a determination for a group of off-payroll workers, engaged under the same contract and working practices.

Identifying a worker providing services though their own intermediary

Make sure you have processes in place to identify whether a worker is engaged through their own intermediary.

Consider how you communicate these processes to relevant individuals across all areas of your organisation, and how they will implement them. You need to take into account how large and complex your organisation is when you consider this.

Your hiring managers need to have adequate training to identify off-payroll workers. Read more about training your staff.

Once you’ve offered a role to a candidate, your hiring and Human Resources (HR) teams need to confirm the terms on which the worker will be brought into your organisation.

At this point, you will need to confirm with the worker whether they operate through their own intermediary. Where there is a third party (like a recruitment agency) in the labour supply chain, they should both:

• confirm with the worker whether they will be providing their services through their own intermediary
• confirm this to your organisation

Where the worker operates through their own intermediary, you should record this. You should also keep records where the worker confirms they do not work through their own intermediary.

Where there are other parties involved in the supply chain, and you are not the deemed employer, you should have processes in place with the deemed employer to satisfy yourself that:

• any status determination statement that states that the off-payroll working rules apply is being acted upon
• PAYE is being operated

Example of considering a new role

This is an example of an organisation correctly deciding against a role-based determination and using HMRC’s Check Employment Status for Tax (CEST) tool to carry out an indicative status assessment, before advertising a role.

A large organisation decides to hire an engineer.

Before advertising the role, the HR team and managers from the engineering department meet to discuss the role.

Following their own processes, they discuss the requirements of the engineering role, and the anticipated terms and conditions. They consider these in line with the employment status indicators. The organisation will need to consider these to make the status determination. These include:

• if the worker has any financial risk
• what degree of control the organisation would have over the individual’s work

• whether the worker can provide a substitute to carry out the role — if so, whether the organisation has any say as to who that substitute is, including:

  • the use of a predetermined, ’approved’ list
  • approval of individuals on a temporary basis as necessary

They also discuss the terms and conditions that the worker would be engaged on, and decide whether an existing, specific role-based contract is appropriate. 

They have a number of standard contracts for support staff and IT contractors, but they do not have a specific contract for this type of engineering role. Because of this, they decide a role-based determination is not appropriate, and they need to make an individual status determination.

The hiring manager and HR decide to use the CEST tool to carry out a status determination.

The organisation has provided training to upskill the hiring manager and the HR staff, and they refer to HMRC’s published guidance in the employment status manual, to make sure they are answering the questions accurately. The outcome of the CEST tool tells them that off-payroll working rules apply.

The organisation advertises the position on the basis that the worker would be treated as employed under the off-payroll working rules.

The hiring manager is involved in the interviewing process. Additional information gained during the interview, and subsequent discussions with the worker to agree the contractual terms and the working arrangements, could affect the status determination.

This could include information around other engagements undertaken through the individual’s own intermediary.

The hiring manager makes sure this information is recorded and stored correctly. This means it can be used when the worker starts with the organisation, to review the initial status determination.

As a result, the organisation can use the full contractual terms and working arrangements to make their status determination.

The next section of the guidelines is Considering your off-payroll working population (part 5).