Does IR35 apply to you?

IR35 has been around for a number of years and is a term many businesses will be familiar with. It is tax legislation that is designed to combat tax avoidance, by establishing whether people who are self-employed should actually be classed as employees for the purposes of paying tax.

 

Many workers supply their services to clients via an intermediary (e.g. a limited company), but who would be an employee if the intermediary was not used.

 

HMRC introduced controversial IR35 rules for the public sector in April 2017. Instead of the contractor having responsibility for determining their employment status, the client or hirer now needs to make the call. It is expected that similar reforms will be introduced for all private sector engagements, potentially as early as April 2019.

 

Planned changes could soon mean that extra costs and risk are transferred to the end engager of anybody providing their services through their own limited company.

 

If these reforms are introduced, businesses will need to understand the options open to them; from continuing to operate outside of IR35 (and bearing the risks associated with this) to engaging the workers in different ways (and bearing additional costs and/or risks).

 

Whether you are a contractor, a consultant, or run your own business, KPP can advise you on how to plan for any changes (especially if the reforms are implemented as expected), maximise your tax position and prepare the paperwork that will help you meet your HMRC obligations, so get in touch to discuss your options.

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