HM Revenue and Customs has released an employment status indicator interactive online tool.

employment status indicator

The tool has been designed so that workers, people or organisations hiring a worker or agencies placing a worker, can find out whether, in HMRC’s view, the worker should be classed as employed or self-employed for tax purposes.

How the employment status indicator tool works

The tool asks a series of questions about the worker’s responsibilities, who decides what work needs doing, who decides when, where and how the work’s done, how the worker will be paid and whether the engagement includes any benefits or reimbursement for expenses. HMRC advises that the answers should be chosen that best match the usual working practices of the engagement.

Once the questions have been answered, the tool gives the view of HMRC on whether the intermediaries’ legislation (known as IR35) applies to an engagement or whether a worker should pay tax through PAYE for an engagement.

HMRC has said that it will stand by the result given unless a compliance check finds the information provided isn’t accurate. It has also said that it won’t, however, stand by results achieved through contrived arrangements designed to get a particular outcome from the tool. This, it says, would be treated as evidence of deliberate non-compliance which would lead to higher penalties.

The tool can be used for current or future engagements in the private or public sector. HMRC advises that the status of the role should be reassessed if there are changes to the engagement or the way the work is done.

This information imputed into the tool is anonymous and won’t be stored. However, those using the tool are able to print out their results for their own records.

Feedback on the employment status indicator tool can be provided to HMRC online.