IR35 is tax legislation that sets out clear rules for doing it. It is particularly aimed at identifying people termed as ‘Disguised Employees’ by HMRC. It determines rules to make sure you’re a genuine company and not an employee disguised as a company just to be able to take advantage of tax breaks. If HMRC think you fall the wrong side of IR35 regulations, you will be taxed just as if you were an employee. Getting it wrong could cost you dearly.
An HMRC investigation could have major financial implications, especially if you have been contracting for several months or years. If the court agrees you are a ‘Disguised Employee,’ you would be liable for all the tax and National Insurance you would have paid as an employee and employer. An additional tax bill of around 25% of your earnings.
That’s why we strive to ensure everything is done to show you fall outside of IR35, right from the start of your contracting career.
Get a free contract review by one of our independent tax experts. This way, you’ll show HMRC that you’ve sought the right professional advice.
IR35 legislation can be confusing and changes regularly, so it's import to know what it is and how it will affect you.
As a UK contractor, it's possible that your recruitment agency may suggest you use an Umbrella Company to adminster your pa. Are they right?