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Network Rail Infrastructure Ltd

Commercial & Procurement
Off-Payroll Working Rules (IR35) Guidance
03/07/2020
Version 1

What is IR35?
The off-payroll rules (IR35) are designed to ensure that individuals who work like employees but through an
intermediary, such as a personal service company (PSC) pay income tax and National Insurance Contributions
(NICs) in line with the same amount that an employee would pay if they were doing the same role.

How does IR35 affect Network Rail?

The obligation to determine whether an engagement falls within the IR35 rules sits with Network Rail.
Therefore, Network Rail must determine the employment status for workers engaged via a supplier, agency or
3rd party.

What does ‘In Scope’ mean

If a worker falls within the scope of IR35, PAYE and NIC will need to be accounted for by the entity in the labour
chain with whom the PSC has contracted, known as the fee-payer.

Fee Payer
The organisation paying a worker’s intermediary will be the fee-payer. The intermediary can be:

- a worker's own limited company, or one they hold a material interest in - known as a personal
service company (PSC)
- a partnership
- another individual

Employment Statement
Network Rail must review all contracts for work and decide whether it implies employment or self-employment
tax status for the worker concerned. Network Rail must issue an employment status accordingly. It is important
for Network Rail to take reasonable care when making the determination.

How is a determination carried out?

Network Rail use the HMRC Check Employment Status for Tax (CEST) tool to assess the employment status. The
determination outcome will be communicated to the worker’s intermediary, representing agency or other
labour provider before the contract or the work starts (whichever is later).

What is my responsibility as an Engaging Manager?

Request an IR35 determination via the IR35 team for any engagements that involve a worker providing a
personal service. The IR35 status determination form must be fully completed and authorised by the Engaging
Manager in Appendix 2.

Can I make my own determination? Or accept a determination from a supplier or worker?

No, any determinations not processed by the IR35 team are invalid. The Network Rail IR35 team is responsible
and authorised to pass IR35 determinations on behalf of Network Rail. There is an explicit requirement to take
‘reasonable care’ in undertaking the status assessment, for example, applying off-payroll working legislation on
determining status
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What happens if Network Rail fails to pass the determination?

Failure to provide an IR35 determination to the agency, 3rd party or supplier will lead to Network Rail being held
liable for the worker’s tax, NICs and potential fines.

What is the time frame to respond?

Network Rail must provide a determination within 31 days of the request.

Direct Engagement
Where a worker is deemed to be in scope of IR35, they must be engaged via a recruitment agency.

Direct employees
Where a worker is an employee of the supplier on their PAYE, Network Rail is still required to provide a statement
about that worker’s IR35 status.

Do I need to request a new determination employment status for any new tender or contract?
Yes, this must be done for every contract that Network Rail agrees with an agency, supplier, 3 rd party or worker.

What happens if the worker changes their job role?

A new determination must be made if any of the working practices change. i.e. job role. You must not use a
previous determination but seek a new determination for every new engagement. HMRC will not stand by the
original outcome.

What happens if the information is incorrect?

If fraudulent information is provided, the person providing this information will be responsible for the PAYE and
NIC. Network Rail must ensure information used is correct. Please contact the IR35 team immediately if you
become aware of any inaccuracies.

What do I need to do if the worker is engaged via Capita, Network Rail’s current MSP*?
No action is required. The IR35 team provides a status determination to Capita to pass to each worker as part of
the onboarding process.

Who do I need to Contact?

Send any queries to: mailto:IR35@networkrail.co.uk

Glossary:
IR35: Off-Payroll Working Rules
PSC: Personal Service Company. This is typically where the worker acquires an off-the-shelf company and
becomes its only, or main, shareholder and director, for example, Intermediary or Limited Company.
CEST: Check Employment Status for Tax – UK Government online tool
PAYE: Pay As You Earn
NIC: National Insurance Contribution
MSP: Managed Service Provider – External provider of a service

Appendices:
Appendix 1: IR35 Chain and Responsibilities diagram

Appendix 2: IR35 Status Determination Form

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Appendix 1
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Appendix 2

IR35 DETERMINATION REQUEST FORM

To request an IR35 status determination the form must be fully completed and signed. Send the application form
to IR35@networkrail.co.uk Please be aware, if fraudulent information is provided, the person providing this infor-
mation will be responsible for the PAYE/NIC and potential fines from HMRC.

Requestor Details
From: Job Title:
Region / Function: Date:
Contact No.

Project Details
Project Insert name of project Reference No. Insert Bravo Project No.
Description of Service.
In brief, outline the service that Network Rail is acquiring from the Supplier, including if it’s supporting an existing
NR team or service.

Workers and Job Roles:

Provide a summary of the job roles and tasks that will be carried out by the supplier. Is the role full time? If no,
please state the number of hours.

Substitution:
Does Network Rail have no right to reject a proposed substitute worker should they be suitably qualified, and
security cleared etc for the role? Would the substitute be paid or the initial worker (whose work the substitute
is fulfilling) pass on the payment to the substitute?

Will the workers be providing work in the same manner as an equivalent Network Rail employee?
This includes flexible and agile working, e.g. worker can have some autonomy over hours and location, but ulti-
mately do we retain the right to insist on certain hours, or presence at a given location, if deemed necessary?

Supervision, Direction & Control:

Will the workers be operating under Network Rail management or direction and to Network Rail standards or
policies? How will the quality of the work be assessed?

Would Network Rail provide guidance on the method of how the work is to be completed?

Expenses:
Confirm any business expenses the worker might be claiming from Network Rail?

Equipment & Consumables:

Will the worker / supplier provide specialist equipment required to complete the work, without Network Rail
offering an alternative? Will the work involve providing consumables that will not be charged to Network Rail?

Note: This does not include stationery, mobile phone, laptop, or equipment a worker elects to provide which is
not necessary. Laptop provision will only be considered if specialist software is required for the role.
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Financial Risk / Accountability:

Will the supplier be expected to incur significant costs in the fulfilment of this work that are not reimbursed by
Network Rail? If work is unsatisfactory, will Network Rail expect the Supplier to remedy the work? Will the
worker be paid for undertaking remedial work?

History & Engagement:

Is this the first time the worker will be contracting with Network Rail? If no, please provide the contract start/end
date and reference number. Has the worker undertaken similar work for different clients in the past 12 months?

Please provide any additional information, if required.

Signed:

Date Signed:

IR35 Team

CEST Reference Number:

Date: