A back to basics guide to the legislation.
IR35 help and advice
Whether you are a contractor, freelancer, or use contractors or freelancers. we’ll help you to quickly understand IR35.
There is a huge amount of information online about IR35 and a lot of it is wildly inaccurate. In our video series, Boox’s CEO Colin Gunnell takes you through what IR35 is, what it means for you and how changes to the way the rules are applied might impact you.
These videos were released in January 2018 prior to confirmation that client determination of IR35 will be extended to the private sector in April 2020.
We will update these resources once there is more certainty about the specifics of this roll out.
Introduction to IR35
It isn’t the easiest or most exciting of topics, but Colin cuts through the complexity to provide you with an understanding so you can decide what is right for you.
What is IR35?
Is IR35 important?
We explain why it matters in the scheme of things.
How is IR35 determined?
An overview of the tests used to determine IR35 status.
What are the IR35 employment tests?
A break down of the 3 main tests of employment status for tax.
Can an IR35 status be challenged?
We look at what happens if you think IR35 status has been incorrectly determined.
Is IR35 for life?
We answer one of the most commonly asked questions about IR35.
What are the risks and penalties?
The consequences of getting an IR35 decision wrong.
I'm a contractor - what should I do?
Advice for contractors working through a limited company.
The key employment test areas
What is 'Mutuality of obligation?
‘Mutuality of obligation’ exists when an agency or client has to offer work to an individual under the terms of the contract and the individual has to take it.
What is ‘Personal service’?
‘Personal service’ hinges on whether the personal service of the worker is required, or if someone else can be sent to carry out the work in their place. This needs to be reflected in both the contracts and actual working practices.
What is ‘Control’?
This refers to the degree of control a client has over what, how, when and where a worker carries out a job. In case law this is called a master / servant relationship.
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Frequently asked IR35 questions
If your contract is determined as “caught” by IR35, it means that your relationship with your client would be one of employment if not for the fact that you are providing your services through a limited company. You are deemed as an employee for the purposes of tax and NIC, but not employment rights.
The income you take from your company is subject to Pay as you earn (PAYE) and National insurance contributions (NIC) – this is known as “deemed payments”. If you are operating in the public sector, the amount your company receives should already have had the PAYE and NIC deducted. If you are operating in the private sector, you are currently responsible for calculating the PAYE and NIC due and operating with deemed payments.
IR35, properly known as the “Intermediaries Legislation”, is a set of rules put in place by HMRC to tackle the “disguised employment” of contractors supplying their services to clients via an intermediary, such as personal service company (PSC). In the eyes of HMRC, “disguised employees” would have an employment relationship with their client, if you removed the fact they have a limited company.
The acronym IR35 comes from the Inland Revenue (now HMRC) press release number 35 in which it was first announced in 1999.
For public sector contracts, IR35 is determined by the client (public sector body), rather than the contractor. If the client decides that the contract is within IR35, then the party paying the personal service company – the “fee-payer” – must tax the contractor at source, exactly as they would an employee on their payroll.
For private sector contracts, it is currently the responsibility of the personal service company director to determine their IR35 status and apply deemed payments on the income for contracts caught by IR35 (although any income for contracts not caught by IR35 income can be taken as decided by the director of the company).
However, in April 2017 there was a change to who was responsible for determining IR35 in the public sector and the government are consulting with a view to extending this to the private sector. A further announcement by the government is expected in 2018.
Our comprehensive IR35 guide provides all you need to know about IR35 rules and how they affect you.
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