Contractor Tax & IR35
When you are working as a contractor or engaging a subcontractor it often entails an enormous and intimidating amount of paperwork, from tax status declarations to payroll. Wouldn’t your time be better spent seeking new jobs or working on existing ones?
Fortunately, Shaikh & Co have the experience to help you meet your obligations while exploiting the tax advantages of contracting.
Our tax specialists offer a full range of services for contractors including business and personal tax returns, annual accounts, company formations, VAT and PAYE returns. We can also take care of your tax computations, carry out contract reviews and cover your company secretarial and bookkeeping needs.
Advice on IR35
HM Revenue & Customs introduced the ‘intermediaries legislation’, more commonly known as IR35, in 2000. The legislation is intended to combat the abuse by an individual who would be treated as an employee were it not for the fact they provide their services via their own personal service company. Working in this manner enables an individual to make substantial tax and NIC savings. If the Revenue investigate a contract and decide that it is ‘caught’ by IR35 they will calculate a deemed payment, treating all income received as salary and demanding all Tax and NI contributions on payments originally paid out as dividends.
Obviously there are very many contractors who are genuinely independent and they can face the same struggle to prove this fact to HMRC. Therefore it is vital that all contractors working through their own companies are fully aware of the legislation and do everything possible to ensure that they remain legitimately outside of IR35. The interpretation of IR35, and the defining of status, is reliant on case law, as such, the determining factors surrounding IR35 change over time and certain issues become more prominent following each significant case.
To determine whether you are caught by IR35 the Revenue will look at both the written contract between your limited company and the agency and the actual working practices, i.e. the way the work is performed on a daily basis. There are a number of key areas such as the right to have a substitute to do the job, control and mutuality of obligations, length of engagement, equipment provision and financial risk that must be considered and incorporated if you are to remain compliant.
If handled well, the taxman generally loses the majority of IR35 challenges, so allow us to guide you through your rights and responsibilities.
For professional assistance on IR35 or any other aspect of business administration, get in touch with us on 01892 552696 or follow one of the suggested ‘next steps’ below:
For more information, see our IR35 and contractors helpsheet.