Business Guides - IR35
The tests a part-time sole trader needs to take to check if he really is a freelancer.
'One objective, even six objectives is fine, but the self-employed must be left to their own devices to hit them.'
Switching from being an employee to a supplier is possible, but beware 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.
Explanation of IR35 legislation, introduced in April 2000, which affects anyone who is working via an intermediary.
Since IR35 was announced various inventive means and schemes have been put forward to circumvent the new legislation. But do they really work?
There has been a lot of debate recently over substitution clauses in agency contracts, and whether they do indeed defeat IR35. In this article I will sum up the Revenue's thinking toward the subject, quoting directly from their employment status manuals.
Since the IR35 legislation was enacted in 2000, the finer details of employment law have become a subject of keen interest to many contractors. This article discusses the feature of employment contracts known as the Obligation of Personal Service.
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.
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 are one of the main differences between employment and self-employment.
Please find our collection of useful IR35 links here...