Affected by IR35?

Danbro

Hi Everyone,

IR35 is certainly a grey area, but it is important that you verify your status if you are considering operating through your own Limited Company or LL partnership.In answering this thread, i don't think IR35 comes into it, however your self employment status does...


read this: vvvvw.hmrc.gov.uk/employment-status/index.htm


Anyhow here is my advice on IR35 and i hope it helps;


What is IR35?

IR35 is a legislation that was introduced in April 2000 as a way of preventing Limited Companies from taking a dividend where they acted as an employee, thus forcing people who were caught by IR35 to pay PAYE tax and class1 national insurance.

How can you determine whether you fall inside the legislation or not?

The two main ways of establishing whether you fall within the legislation are;

1. Your written contract: This will detail information such as pay rates, notice periods, job specification and other important elements.

2. Your working practice: This is basically the job specification (i.e. what service you will be providing)

How do I stay IR35 Compliant?

There are a number of principal factors that need to be considered in order to remain IR35 compliant, especially when entering into a contract. The three main elements to consider are;

Control: It is essential the Service Company maintains autonomy over how, when and where the services are provided, both in the contract and genuine working practices. The contractor must not be supervised or controlled by the client as if he/she were an employee. Where a client can move the contractor from job to job due to the changing priorities, then there will be a right of control over what is to be done and this is a strong indicator of employment.

Right to Substitution: A Service Company enters into a contract to provide a service rather than personal skills and should be able to provide a substitute or engage helpers to provide the service. An employee would provide his services personally.

Mutuality of Obligation: An employer will try to make sure that their employees have a continuous supply of work and will also expect the employees to carry out the work when it requires. A Service Company will do the work it has been contracted to do and will complete the project with no expectation of further work. When work is regularly provided and accepted over a period of time, HMRC may take the view that ‘employee’ status has been created by custom and habit.


if you are still unsure about your IR35 status, we would recommend that you get your contract reviewed by a specialist.

Thanks