Making sense of IR35

Making sense of IR35

Background

IR35 began as tax legislation in 2000 to identify individuals who were not paying the appropriate tax.

The law was specifically aimed at contractors who HM Revenue & Customs considered were working as full-time employees while benefiting from the tax advantages of being self-employed.

Change in legislation from April 2020

It is currently the contractor’s responsibility while working in the private sector to determine their IR35 status, regardless of whether they are operating as a limited company or through an agency. This is however set to change from 6 April 2020.

The duty to make this determination will shift from the contractor to the end client. This change was introduced in the public sector in 2017.

Commencing 6 April 2020 all medium and large businesses will be held accountable for determining the IR35 status and paying the appropriate taxes for their contractors.

Most importantly they and not the contractor will be held liable if HM Revenue & Customs determines a contractor’s IR35 status has been incorrectly assessed.

The change does not apply if the end client is classed as a small business or the contractor is engaged through an umbrella company and being taxed through PAYE.

We can help you whatever your IR35 status

Our limited company accountancy service is perfect if your assignment is ‘outside IR35’. We are also able to offer an umbrella service for those assignments considered to be ‘inside IR35’. Our specialist advisors are always on hand to guide you and provide you with the flexibility you need.

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