IR35 Off-Payroll Workers

Owned by Infinet Support
Last updated: Oct 13, 2023
5 min read

IR35 (off-payroll working rules) ensure that contractors and off payroll workers pay Income Tax and National Insurance in the same manner as an employee.

You are able to check if the IR35 rules apply to an employee using the HMRC Employment Status tool linked here.

If you have run the check and deemed a worked is required to pay Income Tax and National Insurance then you will need to set up and pay them as below.

Config

Scripted Record

Navigate to Scripted Records > Vendor Bill Record and open in Edit

Ensure that the Payroll Vendor Bill Script is released and deployed.

Then save the record.

Payroll config

Navigate to the payroll config record and open it in edit.

Under the General Options section ensure that “Off Payroll Worker Scheme” is ticked.

Account Setup

Accounts Payable Account

  1. Navigate to Payroll Setup > Accounts > New

  2. Number this account if you want

  3. Name this account IR35 payable

  4. Type “Accounts Payable”

  5. Check this is in the right sub (you can select the parent sub and then tick include children if you are multi-sub) then Save

     

Clearing Account

  1. Navigate to Payroll Setup > Accounts > New

  2. Number this account if you want

  3. Name this account IR35 Clearing

  4. Type “Other Current Liability”

  5. Check this is in the right sub (you can select the parent sub and then tick include children if you are multi-sub) then Save

Employee Set Up

Vendor Record

  1. Payroll Administration > Payroll Setup > Vendors > New

  2. Set the Type to Individual

  3. The Name as the contractors name

  4. You can add the Company Name if you want

  5. Category = IR35 Contractor

  6. Set the subsidiary as the sub they will be in

  7. On the Payroll Tab Balance Sheet = IR35 Clearing

  8. Payroll Vendor Category = IR35 Vendor

  9. Tick the UK Off Payroll Worker check box

  10. Click OK on the pop up telling you it will create a linked employee record

  11. Save

  12. This will then show the messages that the vendor is successfully saved and that there is now a linked employee

Employee Record

  1. You will still need to create an Enrolment Record for this worker.
    Complete the mandatory fields.
    Tick “Off-Payroll Worker (IR35)” in the employee details section.
    The worker will likely provide a “New Starter Declaration” with present circumstance of “C: I have another job or pension”.

     

  2. On the Employee Record > Tax Info Tab ensure that they are set as UK Off-Payroll Worker (IR35)

  3. Click OK on the pop up

  4. They should automatically have Irregular Employment Pattern Indicator checked

  5. On the Employee Record > Payroll Tab set their Leave Request Working Week as Casual

  6. They will automatically be set to Pay From NetSuite Time

  7. If they will receive their payslip via email enter an Email For Payslips

  8. Set an address on the Address Tab

  9. Set their bank details on the Payroll Bank Details Tab

  10. Save the record

Billable Items

  1. Global Search for “Page: Items”

  2. Go into the individual items that will be billed/paid and on the Purchasing tab select whether they are taxable or non taxable under the Payroll Item Category

Billing

When you receive a bill you will need to create the bill record

  1. Select the contractors vendor record

  2. Select the account IR35 Payable or Accounts Payable as desired

  3. Select the items that are payable and the relevant amounts

  4. If the vendor has VAT this will show as Tax on the bill and will create a non taxable payslip detail for this

  5. Off Payroll Payment is automatically ticked

  6. Save the bill

The Off-Payroll Sub Tab will then show the payslip details that will be included in the run

 

Pay Run

  1. Navigate to Payroll Administration > Payroll Activities > Start New Pay Run

  2. This can be part of your usual pay run or you can filter to only IR35 Off Payroll Workers

  3. Once selected the required employees and completed the usual pay run fields, submit this and process the run as usual

  4. Once the payslips are processed the payslip details for the IR35 worker will look as below

  5. Once checked approve the pay run as usual

  6. The Journal will need to be Approved and once the run is approved and paid and the posting journal is approved navigate to More > Pay Off Payroll Bills. Pay the bill and this will change its status from Open to Paid In Full.

  7. Submit the RTI as usual.