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Are
you caught by IR35? |
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All
contractors need to be aware
of their IR35 status and
their tax obligations (contractors
outside IR35 enjoy tax advantages
and significantly higher
net returns. |
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Your
status depends on the terms
and conditions of your contract
together with your working
arrangements. If you have
a 'contract of service'
you will almost certainly
be 'deemed employed (inside
IR35), while a 'contract
for service' will most likely
place you outside IR35 as
self employed. |
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However,
IR35 is a complex issue
and the vast majority of
contracts are not exclusively
inside or outside. Many
contractors who thought
they were not affected by
IR35 have been forced to
pay back taxes or have been
taken to court and lost.
Although the actual legislation
is to some extent open to
interpretation, case law
has established a basis
on which a contractor's
IR35 status can be assessed.
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Key
Factors |
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If
you can answer 'yes' to
the following questions
you will probably be deemed
to be inside IR35:
Does your client have the
right to control how you
perform your services, what
tasks have to be carried
out, when and where they
must be performed?
Are you obliged to accept
work and is your client
obliged to supply work?
Are you committed to fulfilling
your contract personally?
Are you committed to working
for just one client? |
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If
you can answer 'yes' to
the following questions
you will probably be deemed
to be ouside IR35:
Can you (with written permission
from your client) assign
someone else to carry out
your duties?
Are you in business on your
own account and are you
responsible for the success
or failure of that business? |
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While
these are important factors,
exceptions do occur and
your working practice also
needs to be considered to
ensure it reflects your
contract. For your own peace
of mind you should get your
individual circumstances
checked by IR35 experts.
Even if your current contract
is outside IR35, you should
have an understanding of
the legislation because
your next contract may not
be. |
