What is IR35?
Essentially, IR35 will affect all contractors who do not meet the Inland Revenue's definition of 'self employment'. Those contractors who fall under the IR35 rules will be liable to Schedule E taxation and National Insurance (N.I), following deductions for expenses. Income will be in the form of a 'deemed payment', following these deductions.

How will I know if I am caught by IR35?
Explanation of IR35 legislation, introduced in April 2000, which affects anyone who is working via an intermediary.

Freelance UK Guide to IR35
Freelance UK's guide to IR35 and how it can affect you as a freelancer.

IR35 Case Analysis
Visit our collection of articles relating to previous IR35 cases.

Factors Determining Employment Status

The articles below will help you understand the factors as to whether IR35 may apply to you or not depending on a number of issues.

Previous status ruling
An area often overlooked is that the Inland Revenue may have already made a Status ruling at a previous visit.

Contract
As most people are now aware a Contract can be written, oral or implied. The Contract is rightly considered to be very important as it sets out the rights and obligations agreed between the Contractor and the Client.

Proper checks
There are many checks to be made to arrive at the correct status of an individual. It is not sufficient to "pick one topic" like substitution or control and base all your arguments on this one point.

Mutuality of Obligation
Mutuality of Obligation is now a common phrase when dealing with Status disputes.

Control
This is one of the main pointers used in disputes regarding employment and self-employment.

Substitution and Exclusivity
This is probably the main point now discussed amongst Contractors, as many incorrectly believe it is the only point needed in a Contract to prove self-employment.

Financial Risk and Payment
Financial risk and payment are one of the main differences between employment and self-employment.

Equipment
This is considered in many cases and can sometimes surprise you with the results.

Part and Parcel of the Organisation
Part and Parcel of the Organisation considers whether the Contractor has now become integrated into the Client Company.

Intention of the Parties
It is often stated that the intentions of the parties is important and there are a couple of questions on the Inland Revenue questionnaire relating to this point

IR35 Links
Please find our collection of useful IR35 links here...

Further Reading
Some more articles to help your understanding of IR35.

IR35 Timeline - A history of the legislation
On 9th March 1999, the Inland Revenue issued a press release detailing how "changes are to be introduced to counter avoidance in the area of personal service provision". A brief history of the legislation.

IR35 tax take falls short at £1.5m
Revealed: the state’s 'pitiful' annual return from enforcing IR35.
May 27, 2009

What triggers an IR35 tax investigation?
Experts reveal how the taxman decides who to investigate under IR35.
Mar 4, 2009

IT freelancer loses IR35 appeal
A freelance contractor must pay for his 'unassailable' relationship of employment.
Sep 10, 2008

Freelancers accused of 'IR35 ignorance'
Ignorant or not, two out of three freelancers aren't bothering with IR35.
Aug 28, 2008

'Scrapping IR35 is not Tory policy'
Tories: it’s the policy group – not us – that want to kill IR35.
Aug 22, 2007

Tories would scrap IR35
The Conservative party is tipped to tackle a trio of freelancer taxes.
Aug 15, 2007

Brown told to make business less taxing
A chorus of enterprise voices urge the chancellor to issue relief on taxation.
Mar 13, 2007

Pre-Budget Report: what freelancers can expect
For what it omits, Brown’s PBR may be less painful than freelancers anticipate.
Nov 6, 2006

Tax fiasco: HMRC utterly fails to understand IR35
Is the Intermediaries Legislation on the way out? 'Don’t listen to the rumours', experts tell Freelance UK.
Sep 8, 2006

'Rogue' advisors cash-in on IR35 fears
Whether hapless or coaxed, Ltd Co. owners are signing up to inept ‘solutions.'
Jun 23, 2006

Brown receives small business 'wishlist'
Hundreds of thousands of small traders urge Gordon Brown to abolish IR35.
Mar 8, 2006

Tory MP vows to 'champion' freelancers
Critic of IR35 joins the business-savvy frontbench of the Tory's industry team.
Dec 14, 2005

FSB calls for abolition of IR35 and a 'level playing field'
The FSB has called on politicians to place small business tax at the top of their election agenda - including an end to the 'administrative burden' of IR35.
Feb 15, 2005

Letwin unveils £300m plan to scrap IR35
Tory party hints at lifting IR35 & S660A barriers to help UK professionals.
Jan 5, 2005

Experts predict 'no end' in sight for IR35
Tax advisors say government is too "dependent" on IR35 just to quit.
Nov 26, 2004

The right of substitution and IR35
The right of substitution is critical to freelancers determining if they are caught by the punitive IR35 taxes. The terms on the right of substitution do vary and we examine those which are likely to lead to an acceptable right of substitution, and those which do not and which will lead to being caught by IR35.
Nov 26, 2004

IT consultant wins "stressful" IR35 case
Sally Howitt an IT Consultant and director of AbFab Ltd has been under investigation for almost 3 years and, not surprisingly, this has been a very stressful experience.
Nov 4, 2004

Usetech Limited loses IR35 appeal
The PCG learnt today that Bill Hood has lost his IR35 appeal against the Inland Revenue in the High Court.
Oct 12, 2004

IR35 Investigation quickly closed
A contractor who wished to remain anonymous has had his IR35 status confirmed only three months after a seemingly innocuous PAYE and business records inspection turned into an IR35 investigation.
Sep 23, 2004

IR35 rules 'fundamentally flawed' say tax bodies
No statistics to show Government's objectives to raise revenue have been met as a radical overhaul in the rules for determining employment status is called for.
Sep 1, 2004

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