IR35 can be a term employed to denote United Kingdom tax rules designed to tax folks in “disguised employment” for a price comparable to those in permanent employment. In this particular context, “disguised employees” refers to workers who receive payments from a client by way of an intermediary and whose connection with their client is such that had they been paid directly they could be staff of the client.

Contractors often use the Restricted Organization as a PSC to obtain work either direct from an end client or by way of an agency. The Revenue’s view was that a large number of IT Consultants, Engineers, non-executive directors and “one man band companies” had been often treated as self-employed when in fact they should have been treated as staff of the end Client. This was in accordance with the terms and conditions that the Contractors worked under. IR35 Advice

The Revenue argued that if the agency or the PSC had been removed, a large number of contractors would really be “disguised employees” who should be included on the client payroll and have tax and NIC deducted every month. The Government announced the “rule changes” which would take impact from 6 April 2000. The first reporting and payments could be due from 19 April 2001.

Ensure records are in location, such as mileage logs and expenses payments. Apart from being needed to prove enterprise expenses claimed, they might aid prove that you had control over the ‘when’ and the ‘where’ because they evidence that work was not always undertaken on-site - Dragonfly proved that just having control over ‘how’ work is performed is not enough.Contemplate having engagements reviewed so that both the contractual terms and the working practices are considered against the key factors of personal service, control and mutuality of obligation, as well as the secondary issues relating to enterprise to enterprise factors and financial risk. IR35 Compliant.

It’s important to note that on 6 April 2007, Chapter 9 ITEPA 2003, also known as Managed Service Organization (“MSC”) Legislation, was introduced. MSC Legislation applies to individuals providing their services via intermediaries which meet the definition of a Managed Service Organization, and an intermediary must contemplate whether MSC Legislation is applicable to them before considering IR35. Intermediaries that do not meet the definition of an MSC must continue to contemplate IR35. In case you think you might fall within the scope of IR35, it’s important to seek immediate professional advice from your accountant. Official guidance can be found on the HMRC website. ZwanzlfrastIR37.

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