Q&As

If a small company (A) is acquired by another small company (B) which is the parent company of a group and the group cumulatively exceeds the small company thresholds, does the off-payroll IR35 regime apply to A and B? If it does, does it start to apply as soon as the acquisition is complete or is there a transitional period?

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Published by a ³ÉÈËÓ°Òô Tax expert
Published on: 05 October 2021
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As explained in Practice Note: IR35—the large and public client off-payroll regime, the off-payroll IR35 regime does not apply to engagements where the end client is ‘small’.

The definition of a Small company for the purposes of the off-payroll IR35 regime, as explained in the same Practice Note in the section entitled: Definition of ‘small’, is taken from the small companies regime (as set out in the Companies Act 2006). That regime contains a test which considers annual turnover, balance sheet total and the number of employees. The financial period in respect of which the test

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Jurisdiction(s):
United Kingdom
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Key definition:
Small company definition
What does Small company mean?

Further to the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015, SI 2015/980 the qualifying conditions are met by a company in a financial year in which it satisfies two or more of the following requirements: —it has a turnover of not more than £10.2 million —it has a balance sheet total (ie the aggregate of the assets as shown in the balance sheet) of not more than £5.1 million —it has no more than 50 employees Certain companies are excluded from the regime, most particularly, all public companies (CA 2006, s 384).

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