IR35 refers to the intermediaries legislation that was introduced on 6 April 2000 (the name comes from the number of the press release issued by HMRC in 1999 that first set out the proposed changes).

Understanding the rules

Before IR35, it was common for employees to provide services to employers through a limited company and thereby avoid paying tax and NI via the employer's payroll.

Many clients and agencies still require contractors to provide services through a company, so that they are not liable for the tax and NI. But IR35 removed the tax advantage of the limited company arrangement by making the contractors liable for the same tax and NI as an employee, if they have an employment relationship with their client.

The problem for contractors is that there is no definite test to establish if you are employed or self-employed. Instead, if you provide your services through a company HMRC requires you to state this on your Tax Return. HMRC may then review your business to see whether the IR35 rules should apply.

How we can help

We specialise in advising contractors on the best way of operating to ensure compliance with the IR35 rules. There is a significant amount of case law in this area and HMRC does not always make the right decision.

We can:

• Review your contract and working practices and give an opinion as to whether your arrangements would withstand an HMRC review
• Advise you on how to arrange your contracts so as to enjoy the tax benefits of providing services through a company where the IR35 rules do not apply
• Relieve you of the onerous administration of running a limited company, whether the IR35 rules apply or not.

Please contact us for your free initial consultation. We will be happy to help you.