Do you understand your responsibilities under IR35? Changes are coming from April 2017 If all of the following apply then you need to follow IR35 legislation:
- you work for a client as a contractor, sole trader, freelancer, or consultant
- you engage with the client and pay yourself through your own limited company or partnership (sometimes called an ‘intermediary’ or ‘personal service company’) or you have a material interest in that company
- you could be considered an employee if the intermediary didn’t exist
If these conditions apply to you then you need to understand the detailed rules and check whether you are within their scope for each contract that falls within a tax year. If there are specific contracts that would be caught by the rules then you need to calculate a deemed employment payment and pay PAYE and NIC to HMRC on this amount.
You should be wary of being offered ‘IR35 proof’ contracts. These often rely on the inclusion of a substitution clause. These have been repeatedly set aside by HMRC (and the courts) if they do not reflect the commercial reality of the arrangements for the services being provided.
HMRC do offer a contract review service. They will review a written contract for you, and if they decide that IR35 doesn’t apply to your contract, they’ll give you a confirmation letter with a unique reference number that will be valid for 3 years.
Alternatively you may prefer to seek advice from an accountant and Burgis & Bullock can help you in this respect.
From April 2017, the rules are changing for anyone providing their services through an intermediary to a Public Sector Body (‘PSB’). HMRC are making it the responsibility of the PSB rather than the intermediary to determine whether their relationship with the worker is akin to one of an employer / employee. There is a lot of concern about how this may work in practice with a number of contractors in IT and interim management already choosing to contract with non-PSB’s in anticipation of this change.
If you currently have a contract with a PSB running past 5 April 2017 or are thinking of entering into one it will be important to get the PSB’s agreement that your arrangement with them is outside the requirements of IR35.
If you need any further help or advice in this respect then please contact us here at Burgis & Bullock either using our on-line form or call us on 0845 177 5500.