If you are an contractor working in IT or engineering, a freelancer, an offshore worker or a consultancy service provider, the implications of IR35 and the self-employed/employed question can be overwhelming or may leave you open to a negative response from HM Revenue and Customs. However, as contractors using ‘one man companies’, you can benefit from job variation and more flexible income tax planning opportunities to maximise and increase your net remuneration.
The benefits are only available if you are aware of and can fully comply with IR35. Of all the groups associated with IR35, contractors are the most affected. The distinctions between being a genuine consultant versus an intermediary for tax avoidance are becoming increasingly blurred. It is important to achieve a ‘contract for services’ indicating self-employment, rather than a contract of service which indicates employment.
Rules introduced in April 2017 force public service organisations to determine the IR35 status and many contractors to the public sector may be required to be paid through PAYE with National Insurance deductions.
The rules effecting public sector contractors are due to be introduced to private sector contractors from April 2020. These changes will mean that when you are engaged by a medium or large sized client, the IR35 determination could be decided for you based on processes created by others above you in the supply chain. If you do not want to fall into the IR35 trap, you should urgently consider your current working arrangements, for instance:
If the answer is yes to any of the above, we strongly recommend that you get your contracts and working practices professionally reviewed as soon as possible to demonstrate you have taken ‘reasonable steps’ to ascertain your IR35 status. Failure to do so could mean your entire income will be subject to standard income tax and National Insurance Contributions as if you were an employee.
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We can advise on how to operate best, whether to work under an umbrella company or form a limited company. We can provide access to a comprehensive professional contract review service that will consider both the contractual terms and the working practices, providing a clear unbiased and independent opinion. We can also help with:
The combination of our specialist Exeter and Exmouth based tax advisers and the experience of our Partners and managers will ensure you are compliant with the legislation while minimising the amount of tax you pay. To find out how best you can benefit from our IR35 tax services, why not give us a call on 01392 258553 or 01395 279521.
We would love to meet you, which is why we offer all new clients a free, no obligation initial consultation. Click the contact button below to see all the methods to get in touch with us and if you like you can leave an email enquiry with the form provided and we will contact you to arrange a time and date.Contact Us