IR35 Insurance- The main Dialogue belonging to the region - Discover more about IR35 Insurance

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How you can stay away from an IR35 Investigation. You can find no guarantees, but one really good guiding principle would be to 'Get your defense in place now'. Steer clear of setting up firms with £2 or £100 share capital; consider issuing £1,000 worth of share capital - it suggests a much more 'substantial company'.  Take into account the level of salary/dividends paid; do not make oneself a target for a Status Inspector trying to maximize the tax possible for HMRC.
 
The statement was basically seeking to clampdown on these so-called one-person services companies. That is, individuals who, while ostensibly acting as staff of a company, stay away from PAYE by instead charging for their services under a contract. Under the rules, a contractual worker falls under IR35 if he or she (the ‘worker’) works for a client but does not invoice the client directly for function carried out, instead: the client contracts an intermediary organization, which then successfully employs the worker. It is easier for the client - if dissatisfied - to dispense with the services of the intermediary than it would be if it employed the worker directly. The client also avoids PAYE or NI tax issues; the intermediary business, in which the worker has at least a 5%beneficiary interest, then invoices the client for the worker’s efforts; the worker takes their earnings in the form of a dividend (a distribution of net profits of the organization to its shareholders) on which NIC aren’t paid.
 
Take into account the industry at the finish of every contract and keep records of all contract negotiations, successful or otherwise not. You could not have substituted, but keep records of potential substitutes whom you could use; similarly, maintain details of matters which show fiscal risk such as contracts which were terminated too rapidly, periods without work and personal losses that you may have produced (e.g. on fixed price work).
 
Essentially, you will likely be deemed to be an employee - but not of the Finish Client, nor of the agency, they are both off the hook - it will probably be your organization that will have to meet the additional tax liability below the “Deemed Salary Calculation”. It really is impossible to quantify with any accuracy what that additional tax burden is going to be without knowing the specifics of each and every case - the turnover of your organization, the amount taken by the shareholder(s) as salary, the amount distributed as a dividend - but as a quite rough guide, the likely cost to you will probably be equivalent to the Employer’s and Employee’s National Insurance Contributions not paid as a result of paying dividends, plus interest and if they can, HMRC will also seek to levy a penalty.This could add at least another 25% to your tax bill.
 
IR35 only applies if the individual is working for a client under circumstances where if it were not for the presence of a limited organization or partnership (recognized as the "intermediary") it could be one of standard employment. The HMRC argues that in these situations the individual is deemed a "disguised employee".  Anyone working by way of an intermediary is going to be caught by the new rules if they fail the 'IR35 test'. This test determines whether the person would be an employee if they had been contracting directly with all the 'client', rather than using this intermediary.  If their terms and conditions or working practices are of employment then they will likely be 'caught' by IR35 legislation.
 
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