COMPLIANCE
IR35 AND PAYROLL EFFICIENCY: MANAGING CONTRACTORS INSIDE THE RULES
S ince the introduction of the off- payroll working rules (IR35) into the private sector in April 2021, payroll professionals have faced a host of operational and compliance challenges. The shift in responsibility for determining employment status and operating pay as you earn (PAYE) for contractors caught inside IR35 has placed significant pressure on payroll teams. Key risks include: l the misclassification of contractors l incorrect tax deductions l inefficient data handling between departments. Frustrations often stem from inconsistent documentation, a lack of integration between systems and the complexity of reconciling contractor invoices with payroll requirements. With more focus than ever on off-payroll workers and a tribunal process forensically analysing the main factors of employment that determine employment status, the need for streamlined, accurate and auditable payroll processes has never been greater. Here, we look at the common pitfalls payroll professionals face with intermediary payroll processing and examine how to improve payroll efficiency for contractors inside IR35. Payroll governance Over the years, payroll professionals have become meticulous on process,
Andrew Timpson, Employment Tax Partner, RSM UK, provides practical advice for payroll professionals on intermediary payroll processing
| Professional in Payroll, Pensions and Reward | October 2025 | Issue 114 22
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