What is IR35?

HMRC introduced the ‘Intermediaries Legislation’, that became known as IR35 in the 2000 budget.

The legislation was introduced to combat ‘disguised employees’. This refers to an individual who would be treated as an employee were it not for the fact that they provide their services via their own personal service company and paying less tax in the process.

Contractors working via limited companies are not liable to pay NICs on income taken as dividends, resulting technically in a revenue loss to the Treasury. As a result of this, IR35 exists to enforce proper working practices.

How is IR35 Status Determined?

To determine whether an individual is caught by IR35, HMRC will look at both the written contract between the limited company and the agency/end client along with the actual working practices. In the event of an IR35 enquiry, the working practices will always tend to carry more weight than the written terms themselves. If a compliant contract is in place, it is crucial that the actual working arrangements mirror the written terms. HMRC will seek clarification of a contractor’s working practices directly from their end client. It is vital that this process is carefully managed.

What Factors Are Considered When Deciding IR35?

The key factors considered when deciding IR35 status are: the extent and degree of control exercised by the client over the worker, the worker’s right to engage helpers or substitutes, mutuality of obligations between the worker and the client, financial risk of the worker, provision of equipment, basis of payment of the worker, personal factors, the existence of employee rights, termination of the contract, whether the worker is part and parcel of the client’s organisation, exclusive services and mutual intention.

This list is not exhaustive and case law shows not to treat this as a checklist to run through mechanically. Instead there are the factors that go towards painting the picture, whose overall effect must be evaluated.

IR35 Review Options

You may wish to engage an IR35 specialist firm to help you to decide your IR35 status. Bauer & Cottrell and QDOS are both leading UK specialists in the IR35 legislation, you will find more details about how they can help you below.

Choose Bauer & Cottrell

Why Choose Bauer & Cottrell?

  • Bauer & Cottrell are leading independent UK specialists dealing in all aspects of employment status and IR35. They were the IR35 experts at the governments Office of Tax Simplification (OTS) producing the report on IR35 for the Chancellor and is a founder member and has served on the HMRC IR35 Forum since 2011. They were also called to provide expert evidence to a House of Lords Select Committee looking at the use of Personal Service Companies in the public and private sector.
  • Bauer & Cottrell have never lost an IR35 investigation case.
  • Bauer & Cottrell’s IR35 contract review services are comprehensive, and all fees are fixed with no hourly rates or surprises.
  • Bauer & Cottrell offer a range of IR35 contract review services from a single contract review to an annual 12-month unlimited contract review service which also includes IR35 investigation representation.

Bauer & Cottrell will:

  • Review all contractual documents and your working practices.
  • Where appropriate negotiate changes to the contract directly on your behalf with your agency of client.
  • Advise you verbally and in writing whether you are inside or outside IR35.
  • Work on a maximum 5 working day turnaround - less in urgent cases for no extra fees.

You can call Bauer & Cottrell today on 01525 406622 to discuss your situation or visit their web site at www.bauerandcottrell.co.uk

Choose Bauer & Cottrell

Why Choose Qdos?

  • Qdos are one of the UK’s leading specialists in the IR35 legislation, completing over 500 reviews every month.
  • They have successfully handled over 1,500 status enquiries on behalf of contractors saving them over £35m in tax.
  • They have a dedicated team of in-house specialists some of whom are ex revenue inspectors meaning, no increased pricing or loss in response time due to outsourcing.
  • All of their IR35 review products have the advantage of written reports.
  • They have a wide range of review products to suit all needs and budgets.
  • Their IR35 review products have no hidden fees as all prices are fixed.
  • Their in-house team of IR35 specialists are more than happy to give telephone advice and answer questions following any review product.
  • They offer a fast-track turnaround service for a small additional fee.
  • Qdos also provide a wide range of contractor insurance policies from a revolutionary full IR35 insurance to low-cost business insurance (Professional Indemnity, Employers and Public Liability) specifically tailored around the needs and potential risks for contractors.
  • Qdos Contractor have a team of experienced consultants who can cover all areas of tax consultancy and can provide specialist assistance in areas such as; personal tax, business tax, corporation tax, capital gains tax, inheritance tax, PAYE, construction industry, NICs and VAT enquiries and investigations.

To contact Qdos to discuss this service further, please call the Consultancy Team on 01162 690992 or e-mail contracts@qdoscontractor.com

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