Legislation designed to stop workers using an intermediary, such as a limited company, to pay less tax, when they should instead be employed directly by the client and treated as an employee.
The Intermediaries Legislation (IR35) was first mentioned in a 1999 Inland Revenue press release and became law in 2000.
The counter tax avoidance measures aimed to prevent ‘disguised employment’. In a nutshell this is where a person performs the same or a similar role to that of a company employee but is being paid via their Ltd Company.
To determine whether a worker is either inside IR35 (deemed an employee) or outside IR35 (deemed a genuine PSC contractor) a test was introduced by HMRC in 2017 called CEST (Check Employment Status for Tax). The test was used (alongside other independent tests) when IR35 was applied to the public sector back in 2017 to provide Status Determinations for individual PSC contractors.