IR35 Compliance Services.
The risks around IR35 and general worker tax status can cause confusion and bring some serious consequences if you get it wrong.
IR35 is a piece of legislation initially introduced in July 2000 to target disguised employment. It utilises a set of qualifying tests to find out if someone is genuinely in business on their own account (through an intermediary) or a disguised employee of the client.
Essentially, IR35 simply states that if a worker is a disguised employee of the client then he/she should be subjected to the same tax and national insurance deductions as other regular employees are. IR35 does not therefore affect those paying employed levels of tax (for example, umbrella employees) but does affect those running their own personal service companies (PSCs) or operating through a partnership.
Contact us if you wish to discuss the employment tax status of any worker you engage with, even those who appear to be truly self-employed.
Has IR35 legislation changed since it was introduced?
Since it was introduced, HMRC has looked to improve the application of IR35 by updating their guidelines, introducing an IR35 helpline and providing better training to HMRC advisors. On 6th April 2013, IR35 was also extended to ‘office-holders.’ This means that where a contractor fulfils the duties of an office, the income from those services should be subject to PAYE/NICs as employment income. Quite a change!
In April 2017, a new section of IR35 was introduced that affected contractors working in the public sector. Public sector clients are responsible for determining whether IR35 applies and where a contractor works within the bounds of IR35, the public authority, agency or third party paying the limited company (fee payer) is responsible for deducting tax and NICs from those payments. It must also pay employer’s NICs and is included for calculating the Apprenticeship Levy.
The responsibility for operating IR35 shifted from the individual contractor to medium or large-sized clients and third sectors in April 2021. Developments in the April 2021 legislation, such as the client led status disagreement process, were also applied to the public sector.
Are you worried about IR35 - what are the options?
What is our advice?
Leave it to us - we give tailored and dedicated advice on what is suitable.
Contact us if you wish to discuss the status of any worker you engage with, even those who appear to be truly self-employed. Remember, the responsibility to assess workers now falls with the fee-payer.
Limited company contracting remains a legitimate way of working and continues to be the most tax-efficient. Our IR35 advice will include a review of the contract(s) and everyday working practices. If the contractors falls outside IR35, you won't need to worry about the AWR or pension obligation.
A compliant service like ours will weigh up the contractor's individual circumstances and only offer the most appropriate route. We will carry out a full assessment and come to a genuine determination on your behalf, so you don't need to worry.
