What you need to know about ir35

IR35

Ukcontracting.co.uk

What is IR35a brief introduction

Tax Legislation Introduced to counter tax avoidance by individuals supplying their services to client via an intermendiary.

Disguised Employees Are what HMRC are looking for. Disguised employees are contractors that get all the benefits of being employed but the tax benefits of using a limited company.

Here to stay IR35 is here to stay. It’s too important for HMRC to keep it in place as it’s so easy for contractor to work around the rules if it not in place. One idea is to combine PAYE and National Insurance. That’s not going to happen any time soon.

Ukcontracting.co.uk

Financial impact of IR35Let the chart do the talking

$20 $30 $40 $50 $75 $100 $125 $0.00

$2,000.00

$4,000.00

$6,000.00

$8,000.00

$10,000.00

$12,000.00

After IR35Before IR35

Rate Per Hour

Ukcontracting.co.uk

Control Substition

Financial risk Part & Parcel

Business Entity testsThe test that makes IR35 simple!

Contractors are brought in by companies to use their specialist knowledge that they don’t process inhouse, so it’s important make sure you have control over the work you perform.

Substitution in a contract allows you to send a replacement to perform the contracted work. This is one of the key areas that place contractors outside of IR35.

Contractor should be exposed to an element of financial risk to be outside of IR35. Risks can be shown in a number of ways; invoicing for the work or working on a fixed price per project.

Often it's easy to mistake a contractor from a permanent employee but it’s important for contractors to visible as temporary staff and not considered one of the team

Mutuality of obligation

Equipment

Mutuality of Obligation (MOO) means a contractor is not expected to accept another contract from the client and the client is not expected to offer one.

This is a very difficult test of IR35 as most clients will want/need you to work on their computers and networks. Unfortunately equipment can be related to a number of different section within the Business Entity Test

THANK YOU FOR reading SEE YOU IN THE NEXT PRESENTATION