IR35 Insurance- The Dialogue in the region : Find out more about IR35 Insurance

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In 1999, as part of that year’s Budget, the UK’s Chancellor of the Exchequer, Gordon Brown, declared that strategies could be initiated to resist tax reduction via so-called personal service firms. Appropriately identified as the “intermediaries legislation”, it truly is more typically referred to by the consecutively-numbered Inland Revenue (now HMRC) spending budget press release number 35 in which it was announced (i.e. the 35th press release of that year), titled IR35: Countering Avoidance within the Provision of Personal Services. The press release was issued on 9 March 1999, the exact same day as the Chancellor of the Exchequer's spending budget statement.
 
Currently the whole process is slightly misleading.  When HMRC approach contractors to arrange an Employer Compliance Visit, no mention is ever produced of IR35 and for the uninitiated; the matter is portrayed as a 'normal' PAYE visit.  And yet, take into account the Top 10 areas that HMRC are seeking for in a 'normal' Employer Compliance Review: Termination payments, Status issues when the business engages workers, Expatriate payments, Entertaining, Company Cars & Fuel, Construction Industry Scheme, Personal incidental expenses, Aggregation of earnings, Travel & Subsistence, Long Service Awards. How numerous of these issues are relevant to a contractor?  In fact how much paperwork is involved in maintaining the PAYE records for a contractor?  Assuming, that these are even held by the contractor - most will surely be reliant upon their accountant for the completion of the payroll and also the P11D and P35 returns that must be completed.
 
The Revenue argued that if the agency or the PSC had been removed, a large number of contractors would really be “disguised employees” who should be included on the client payroll and have tax and NIC deducted each and every month. The Government announced the “rule changes” which would take effect from 6 April 2000. The first reporting and payments could be due from 19 April 2001.
 
Does IR35 affect all contractors? Yes, within the sense that all contractors should consider IR35 and take action to protect themselves from it. Nevertheless, not all contractors are caught by IR35. Determining regardless of whether you are caught by IR35, (or being ‘inside IR35’) depends on a number of factors. It really is not entirely objective whether a contractor is caught and depends on the terms and conditions in the contract, together with the contractors operating arrangements. Being inside or outside IR35 is not a black and white issue. Estimates are that 20% of contractors are definitely inside IR35, 20% are definitely outside and also the rest are in a grey area in the middle.
 
In case you determine oneself to be outside IR35 but, on close inspection, the Inland Revenue decides otherwise, you could be in for a substantial bill. HMRC are actively looking for and clamping down on non-compliance, so you have to make sure you’re whiter than white. We have the experience and in-depth knowledge needed to make a thorough assessment of your personal circumstances and specific contract to determine your IR35 status and offer accurate advice. (Click here to see how we helped an IT contractor faced using a back-dated tax bill.)
 
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