IR35 – Explained
What is IR35?
The Intermediaries Legislation, the document known as Inland Revenue 35, which is referred to by HMRC as IR35, is intended to distinguish between workers who are self employed and employed.
Do I fall under IR35?
There is no simple way to answer this question.
There is no scorecard or point system to see if you meet the required legislation each assignment needs to be assessed individually.
Am I employed or self employed?
It is important to assess your status, are you employed or self employed?
If there is a golden rule to being self employed, it would be to “keep your identity separate from your client”.
In other words: protect your brand; separate your business interests from those of your client; never allow yourself to become part and parcel of the client’s operation; make your own decisions about how the assignment is to be completed. You are your own business, your own boss, and you have to stay that way at all times or accept “employee status” and pay income tax under the PAYE scheme and National Insurance accordingly.
Ways in which you can help to justify your self employed status are as follows:
Are you using your own tools?
The more complex area concerns an engagement where the client provides substantial equipment for the worker to use. This is by no means fatal to the self employed status but may lead to HMRC asking questions about the Limited Company such as:
The most important element is the surrounding circumstances on each particular engagement.
HMRC IR35 investigations tend to only scrutinise Limited Companies where the duration of activity is significant.
What should I do if I am unsure of my status?
Should you have any concerns regarding IR35 then please contact us at Foremans to discuss your issues further. Foremans can also offer an IR35 review of your contract*.
*An IR35 Review is free of charge for clients who have selected our Premium Package.
If you would like to discuss any of the issues noted above please contact us on:
01244 625 500 or 01978 364 000
contactus@foremansllp.com
Whilst all due care and attention has been taken in the preparation of these notes no liability
can be accepted for any omission or item contained therein.
Foremans LLP
June 2019