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IR35 Advice Centre

 

What is IR35?

What is IR35
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Contact Qdos Contractor:0116 269 0999
 
 

IR35 Guidance

 

What is the ​IR35 Legislation?

IR35 is the common name for the Intermediaries Legislation which is designed to combat a form of tax avoidance whereby individuals are providing services similar to an employee but through a personal service company (their own limited company or partnership).

Some of the criteria used to determine whether someone is ‘inside’ (i.e. caught) or ‘outside’ IR35 is common sense; if you act like and are treated like an employee you should be taxed as one. However, there are a lot of grey areas in the legislation and some points which may seem relatively insignificant can have a major impact. Therefore it’s always best to consult an expert before making any decisions over your IR35 position.

From April 2020, IR35 is changing for those engaged to a medium or large client in the private sector. These changes have already been in place for the public sector since 2017. Click here to find out more.

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Recommended Guides

 

 

Guide_To_IR35 1

Contractor Guide to IR35 Reform

Contractor Guide to IR35 Reform

 
 
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Why Was IR35 Introduced?

 

First issued in 2000, IR35 targets those workers considered in the eyes of HMRC to be ‘disguised employees’. Contractors, being technically self-employed, are not taxed in the same way as average employees, taking dividends from their company and paying far less in National Insurance Contributions. Because of this, HMRC are keen to ensure that those working as contractors (and paying less tax) are indeed genuinely in business on their own account, and are not working in the same way they would have been if employed directly by their client.

How is IR35 Determined?

 

In an enquiry, HMRC will look at the contract you have with your agency (or end client if direct), so this is the first thing to check when determining your IR35 status. Some contracts will contain negative clauses from an IR35 perspective, so it’s important to have it reviewed as early as possible.

They will also delve into the actual relationship between you and your client, commonly referred to as your actual working practices. If your contract is IR35 compliant but they subsequently find that you are treated like an employee in reality, they will effectively say the written contract is worthless. It is therefore vital to ensure that your contract and working practices mirror each other.

There are a range of IR35 status tests which are used to paint a picture of employment or self-employment. In general, they look to determine whether you are operating like a genuine business providing a contract for services, or akin to an employee providing a contract of service. Using the status tests, the hypothetical contract is built - this is the hypothetical agreement between you as the worker and the end client organisation you provide services to, to determine the taxes to pay.

How is IR35 Policed?

 

If you are operating ‘outside’ IR35 and take dividends from your company, you run the risk of being on the receiving end of an IR35 enquiry. This is effectively an investigation where HMRC review your circumstances and ultimately decide whether or not you have been paying tax correctly.

If they decide that you are a ‘disguised employee’, you will be required to make a deemed payment, effectively paying back all tax and NI you would have paid if you were an employee (plus interest and a possible penalty). This can easily run into tens of thousands of pounds, which is why IR35 is such a big issue for contractors.

 

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The Company

 

About us

Why Qdos?

 

Qdos Contractor are one of the leading providers of specialist contractor insurance services in the UK. Our online application process takes only a matter of minutes with all documentation issued instantly. Unlike many other brokers, we don’t hide our premiums until you've provided your details, as we are confident that our premiums, service and product are the best in the market. In addition, Qdos Contractor is one of the leading authorities on the IR35 legislation and have handled well over 1,500 IR35 enquiries on behalf of UK contractors.

 

Our History

 

Qdos began in 1988 as a tax consultancy business and has grown significantly over the past two decades, providing expert business services, products and advice. Over the years, Qdos has grown in both size and reputation as a trusted contractor insurance broker as well as an expert tax advisor. Our aim is to provide UK contractors with the assistance and service with IR35 issues they need as well as sustaining excellent quality and competitive premiums in the contractor insurance market.

Need Help?

 

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