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Tax & Legal :: IR35
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.
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.
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.
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.
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
Please find our collection of useful IR35 links here...
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.
Taxman agrees to cancel his Business Entity Tests
'The odds were stacked against the BETs from the off, so their withdrawal is not before time.'
Oct 28, 2014
Freelancers must wait a little longer for the IR35 Review
The future of IR35 is unlikely to be signed off next month, as HMRC had hoped.
Oct 20, 2014
HMRC manages expectations ahead of IR35 Review
IR35 Forum told that what gets recommended doesn't necessarily get implemented.
Oct 15, 2014
IR35 Forum-backed group wants BETs to die
Advisers say the IR35 Scenarios and Business Entity Tests should be no more.
Sep 30, 2014
HMRC unveils new IR35 guidance
Fresh IR35 guidance will clarify things for some freelancers, but alarm and unsettle others.
Jul 15, 2014
Assumption, not fact, is the basis of the government's IR35 response
Freelancers won't be surprised by alarming implications in the state's reply to the PSC inquiry.
Jun 19, 2014
Government reply to PSC probe: industry responses
At-a-glance reactions to the government's PSC inquiry feedback.
Jun 17, 2014
Freelancers' Questions: Does being bound to the client site affect IR35?
Not being controlled on location can help make your contract more IR35-friendly.
May 7, 2014
IR35 being scrapped or shelved? Don't hold your breath
Why the PSC Committee's report is an unhelpful medley of 'ifs' and 'buts.'
Apr 14, 2014
PSC Committee: the 16 recommendations
What the Lords inquiry into freelance companies recommends and why.
Apr 9, 2014
Lords 'slap HMRC in the face' over IR35 and PSCs
The PSC Committee's report is scathing about the taxman, not freelancers.
Apr 8, 2014
HMRC official 'undersold Lords on IR35 by £75m'
PSC inquiry was told by the taxman that IR35 is less effective than it actually is.
Jan 14, 2014
Scrapping IR35 'would save freelance companies £843 a year'
Lords given evidence on why IR35 should be suspended or scrapped.
Dec 19, 2013
New approach to IR35 nets taxman £1.1m
Freelance companies can now have their say on the seemingly fruitful reforms to IR35.
Dec 12, 2013
IR35 investigations surge to seven-year high
HMRC enquiries into personal service companies are up four-fold on 2011-12.
Nov 28, 2013
BBC freelancers to sit ‘control’ test amid tax concerns
Corporation wields the axe over 'controlled' freelancers who refuse to join its payroll.
Nov 11, 2013
Freelancers' Questions: Are my client's requests a red flag under IR35?
Expert warns against the client company's meeting, team-building and manual.
Nov 8, 2013
August IR35 Forum – Are changes afoot for freelancers?
Forum member Kate Cottrell says a shake-up to IR35 processes could be incoming.
Oct 18, 2013
HMRC deploys a fourth IR35 specialist team
IR35 Forum minutes reveal another crack unit is targeting employment status.
Jun 11, 2013
Freelancers' Questions: Am I caught by IR35?
Tax expert helps a freelancer, of sorts, fearing the stronger Intermediaries legislation.
May 16, 2013