Some rules already apply to all public sector clients. These include:
government departments, including their executive agencies
companies owned or controlled by the public sector
schools or universities
parts of the National Health Service
Until April 2020, when a private sector business contracts with a PSC it does not have to deduct tax under the Pay As You Earn System (PAYE) and does not have to pay employer's NICs from payments made to the PSC. Therefore, it is the PSC’s obligation to decide whether or not the contractual relationship in question falls inside or outside IR35.
From 6th April 2020 the obligation for determining employment tax status and whether the IR35 rules apply will pass from the PSC to the end-client, for some private sector companies. Where it does apply, the fee-payer will be responsible for deducting income tax and employee NICs, and accounting for those together with employer NICs. If the client gets the analysis wrong, it will be liable for the underpaid tax and associated penalties and interest.
The fee-payer could either be the client or, where there is an intermediary agency - the agency.
However, this will only apply to medium and large-sized private sector clients.
For the rules to apply to a private sector company, it should meet 2 or more of the following conditions:
it has an annual turnover of more than £10.2 million
it has a balance sheet total of more than £5.1 million
it has more than 50 employees
The private sector includes third sector organisations, such as some charities.
If a company is exempt the determination will remain the responsibility of the worker’s intermediary.