IR35 Accountants and Tips for IR35
The term IR35 refers to the mediators legislation of 2000, which was drawn up to contradict the alleged tax escaping by people doing work in a way more akin to that of a PAYE workers.
The fist target policy for the IR35, which became law via calendar 12 of the Finance Act 2000, was to make sure that people working via limited companies would be subject to the similar levels of tax as ‘normal employees’, when the limited company employee was performing a similar task, in the equal manner as the worker.
This association will be documented by two contracts: the one that the agency signs with the end client to find the resources which will allow the end client to complete the project; and the contract that the agency signs with the contractor’s Limited Company. More will be said about this elsewhere later, but the first thing to see is that there is no contract between you, the contractor, and the end client.
What the IR35 seeks to do, is create a hypothetical contract between you, the contractor, and the end client.
The IR35 ‘Deemed Salary Calculation.
If you wish to know how the Deemed Salary Calculation works, then please view the Deemed Salary Calculation page, which is taken from HMRC’s own website, but in essence once a small allowance has been made for expenses, the remaining will be deemed to be your gross pay and the Employer’s NIC due to HMRC.
Find IR35 Accountants
Make sure the accountant specializes in contractor affairs and understands the key issues relating to contracting, such as IR35. This requirement is crucial, and will rule out most high street accountants.
HMRC comments about IR35 on its website: “The aim of the legislation is to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries, such as Personal Service Companies or partnerships”.
If you consider that you or your business could be affected by IR35 then you should speak to a Contractors Accountant who specializes in these matters.
Determining your IR35 Status
Please read our article on determining your IR35 status to understand what the HMRC will be looking for.
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