In the event of an IR35 inquiry, HMRC will attempt to establish the true relationship between the contractor and the end client in order to determine employment status. As many contracts are generic, the investigating officer will often place more emphasis on what’s known as the ‘hypothetical contract,’ formed by the impressions they gather about the day-to-day working practices of the contractor while on a given assignment.…READ MORE
A right of substitution clause states the contractor’s right to send a replacement in their place if they are unable to work on the contract. While having a right of substitution clause in your contract won’t guarantee that you’re outside IR35, it’s part of an important set of factors that can help to prove your self-employed status.…READ MORE
If you run your business as a limited company, often referred to as a personal service company, then the option of receiving a percentage of your income in the form of the dividends rather than a salary is one which should be seriously considered.…READ MORE
Contractors who reduce their tax liabilities by billing their clients via their own limited company will know that they should do everything they can to avoid falling into IR35 rules.
One mechanism for doing this is to keep detailed timesheets which will allow you to demonstrate to a HMRC investigator that you are in fact self-employed and not a ‘disguised employee’.…READ MORE
The Inland Revenue’s 35th press release in 1999 was titled IR35: Countering Avoidance in the Provision of Personal Services. It was released on the same day as the budget statement and continues to exist. The legislation was designed to tax “disguised employment” at a rate similar to employment.…READ MORE
The prospect of an IR35 investigation is sure to unnerve any contractor whose fees are paid through their own limited company. Even if your tax affairs are entirely in order, dealing with HMRC investigators can be a serious distraction and eat into time you could be spending on clients and although you may be confident that you can prove you are truly self-employed, there may still be a risk that HMRC disagrees and demand ‘unpaid’ taxes and a possible penalty.…READ MORE
On the back of new changes restricting tax relief on travel and subsistence expenses for temporary workers, independent professionals contracting through their own limited company / PSC are to face a new test to determine whether they are in/out-of-scope of IR35.…READ MORE