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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.
Government approves IR35 changes from April
Treasury lets on that Budget 2016's rewrite of IR35 in the public sector is going ahead.
Aug 5, 2016
Private sector quizzed on public sector IR35 plan
Testing the water? Taxman asks companies about his IR35 proposals for organisations.
Jul 14, 2016
Osborne's IR35 proposal 'open to legal challenge'
Recruiters warn of a legal fight if they have to decide the status of freelance companies.
Apr 7, 2016
HMRC confirms 'IR35-specific ESI tool'
Taxman's new way to test freelancers for IR35 will be in beta by the spring.
Feb 9, 2016
HMRC publishes IR35 consultation
What IR35 aspects the Revenue wants your response to by September.
Jul 20, 2015
Self-employment tsar puts IR35 in his sights
David Morris MP wants to tackle the 'unnecessarily complicated' Intermediaries legislation.
Jul 8, 2015
Doubts cast over IR35 confirmation letters
HMRC rejects accusations that it shifted the goalposts on confirmatory letters letters and IR35.
May 22, 2015
When a few IR35 updates come along at once
Two new frameworks + four official moves = IR35 (and the Forum) going nowhere.
Apr 7, 2015
Freelancers to fight their IR35 cases at tribunal
Taxman has issued IR35 status decisions that he'll soon spell out to everybody.
Mar 31, 2015
Adviser bets against Osborne tackling IR35
'IR35 unlikely to rear its head in the Budget due to HMRC update just four days before it.'
Mar 18, 2015
Freelancers' Questions: What now that HMRC says I’m inside IR35?
Legal expert spells out the options for a locum caught by the Intermediaries legislation.
Mar 3, 2015
Freelancers' Questions: Is a single client OK and how to broach time off?
IR35 is the underlying fear of a freelance consultant needing a break from his only customer.
Feb 13, 2015
Taxman's IR35 enquiry yield falls 61%
IR35 investigations last year netted a paltry £430,000 for the Revenue.
Feb 12, 2015
HMRC releases IR35 Contract Review data
What the IR35 Review says about the 'slow, cumbersome and mistrusted' Contract Review Service.
Jan 15, 2015
Taxman releases IR35 Helpline figures
What the IR35 Review says about the increasingly quiet HMRC phone service.
Jan 13, 2015
IR35 Forum Administration Review: at-a-glance
The 32 recommendations on IR35, and which of them HMRC accepts/rejects.
Jan 9, 2015
Freelancers' Questions: Can I avoid IR35 by moving sector?
Employment status expert disappoints a creative freelancer seeking a Plan B that's IR35-free.
Nov 12, 2014
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