IR35 Compliance Policy – LSA Recruit
Version: 1.0 Effective Date: March 10, 2026 Website: www.lsarecruit.co.uk
LSA Recruit is committed to maintaining full compliance with the UK Off-Payroll Working rules (Chapter 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003), commonly referred to as IR35. As a provider of IT staffing and recruitment services—including Contract and Contract-to-Hire solutions—we prioritize transparency and legal integrity in every placement and are committed to adhering to HMRC guidance and applicable legislation.
This policy outlines how LSA Recruit manages its obligations regarding the engagement of contractors who operate through intermediary companies, such as Personal Service Companies (PSCs) and other intermediaries.
This policy applies to all contract and temporary placements facilitated by LSA Recruit where the services are provided by an individual through an intermediary. It encompasses all specialized placement areas, including but not limited to Business Intelligence, Artificial Intelligence, Data Science, Salesforce, SAP, and Cloud Analytics.
In accordance with UK legislation, the responsibility for determining the IR35 status of an assignment typically rests with the end-user client (the “Client”), provided they meet the statutory criteria for medium or large-sized entities.
- Client Responsibility: The Client must assess whether the engagement is “Inside IR35” (taxed as employment) or “Outside IR35” (genuine self-employment). The Client must issue a Status Determination Statement (SDS) outlining the decision and the reasons behind it and must take reasonable steps to pass the SDS down the labour supply chain to the relevant parties.
- Reasonable Care: Clients are legally required to exercise “reasonable care” in reaching their determination. LSA Recruit will not accept determinations where it is evident that a blanket assessment has been applied without consideration of the specific working practices.
- LSA Recruit’s Role: We facilitate the communication of the SDS between the Client and the contractor. We also provide guidance to Clients on the importance of assessing working practices, such as Supervision, Direction, and Control (SDC), Substitution, and Mutuality of Obligation (MOO).
Where LSA Recruit acts as the “Fee-Payer” in the supply chain for an engagement deemed “Inside IR35”:
- PAYE Deductions: LSA Recruit will deduct Income Tax and Employee National Insurance Contributions (NICs) via PAYE before paying the intermediary (or where applicable, before paying the worker).
- Employer Costs: LSA Recruit will account for Employer NICs and the Apprenticeship Levy where applicable.
- Payments and Reporting: LSA Recruit will make the required Real Time Information (RTI) submissions to HMRC and provide the worker with appropriate payslips and statutory information where applicable.
For engagements deemed “Outside IR35,” LSA Recruit will pay the intermediary the gross amount invoiced, provided all compliance documentation is in order and the SDS remains valid.
LSA Recruit ensures that all contracts for services reflect the actual working practices of the assignment.
- Outside IR35: Contracts will emphasize the contractor’s autonomy, the right to provide a qualified substitute, and the lack of mutuality of obligation.
- Inside IR35: Contracts will acknowledge the tax treatment of the engagement while maintaining the commercial nature of the business-to-business relationship.
To ensure accurate determinations, LSA Recruit requires:
- Candidates/Contractors (Contractor Obligations): To provide honest, accurate, and detailed information regarding their business structure and working practices, including (where requested) the right of substitution, level of control/supervision, working hours and location requirements, equipment provision, financial risk, and how the engagement operates in practice.
- Clients (Client Obligations): To provide a comprehensive description of the role and the level of integration the contractor will have within their organization and to exercise reasonable care in making the status determination and issuing the SDS.
Providing false or misleading information to circumvent IR35 legislation is strictly prohibited and may lead to the termination of the business relationship.
If a contractor disagrees with a Status Determination Statement issued by a Client:
- The contractor must provide a written representation explaining why they believe the determination is incorrect, including any relevant evidence of the actual working practices.
- LSA Recruit will acknowledge receipt and forward this representation to the Client (and/or the party responsible for responding under the off-payroll rules, as applicable).
- The Client has 45 days from the receipt of the representation to respond, either by confirming the original SDS with an explanation or by issuing a new SDS.
- During the dispute process, LSA Recruit will apply the SDS in force for payment and tax withholding purposes unless and until a revised SDS is issued.
- LSA Recruit will facilitate this dialogue and communicate the outcome to the contractor once received.
For placements involving our offshore recruitment services, IR35 applies if the contractor is a UK tax resident or if the work is performed within the UK. LSA Recruit ensures that international placements are reviewed for cross-border tax compliance and that data transfer remains compliant with UK GDPR.
All data related to IR35 assessments and tax documentation is handled in accordance with our Cybersecurity protocols. We utilize secure systems to store SDS documents and financial records to protect the sensitive information of both our candidates and clients.
LSA Recruit monitors HMRC guidance and legislative developments on an ongoing basis and reviews this IR35 Compliance Policy annually (or sooner where required) to ensure continued adherence to the off-payroll working rules and “People First” recruitment standards. LSA Recruit may also carry out periodic audits and sampling of placement documentation (including SDS records and associated contractual documentation) to support compliance across its supply chain.
Contact Information
For enquiries regarding IR35 status or this policy, please contact the Legal/Admin Team:
LSA Recruit Ltd
104 College Road,
Vyman House, 3rd Floor,
Harrow, Middlesex,
HA1 1BQ, United Kingdom.