Friday, 4 December 2009

All About IR35

Contractors who are inside IR35 pay much more tax than people who are outside, hmm?! not sure what this means and why?

Who is caught by IR35?

As a contractor you will be inspected by HMRC, on average, every 5-6 years. If you're asked to be inspected, you should take legal advice.

Your application is to be reviewed by HMRC which means all the previous contracts will be reviewed. HMRC's goal is to accuse you of a failure that might not be aware, so you must be fully prepared for the review and take legal advice.

If you are about to sign a new contract then you should immediately ask for a review to protect your own interests.

If you are caught by IR35 and receive an extra tax bill, then you may only have 3-6 months to repay 6 years of additional liabilities. This can often be very difficult and seriously affect cash flow.

Working Conditions of an Employee vs Working Conditions of a Self Employed Contractor

The Revenue’s opinion is that if you have been working for the same Client or through an Agency for the last 2 years, then you should be treated as an employee.

How to stay out of IR35?

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