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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.
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
Legal firm defiant over alert about IR35 advice
Lawyer under fire from ex-tax inspectors over a 'misleading' warning sticks to his guns.
May 13, 2013
Why employment status experts are still best for IR35 aid
Freelancers may think the status of IR35 advice from tax advisers has changed, but it hasn’t.
Apr 24, 2013
When advice to avoid IR35 is no longer sacrosanct
IR35 advice from accountants and insurers isn't safe from HMRC's prying eyes.
Apr 22, 2013
Freelancers' Questions: Is IR35 a risk if the client was my employer?
'Moving from payroll to the preferred supplier list is fraught with difficulty because of IR35.'
Apr 17, 2013
HMRC unveils IR35 guidance for 'office-holder' freelancers
Taxman's guidance slammed as disappointing, as the 'IR35 fog' remains.
Apr 4, 2013
Taxman triples IR35 investigation activity
193 freelancers suspected of disguised employment rounded up in half a tax year.
Mar 25, 2013
HMRC set to unveil new IR35 guidance
Just five days before Budget 2013, HMRC says new IR35 guidance is incoming.
Mar 15, 2013
What January's IR35 Forum means for freelancers
Messy, unresolved issues and HMRC's unwillingness to give IR35 suspects longer to respond.
Feb 21, 2013