IR35 Legislation – How Does It Affect Your Business?
Could your business be affected by IR35? Although the IR35 legislation was introduced primarily against workers in the IT business, it must always be borne in mind that all workers who use a service company have the potential to be caught. HM Revenue and Customs will look at the working relationship between the end user and the service provider from a number of angles for example the degree of control the end user has, and the financial risk the provider has i.e. is he paid by the hour/day or on a fixed price for a specific task. |  |
There are many other factors which comprise evidence or otherwise of being deemed a service company, but importantly, each case is considered on its own merits should HM Revenue & Customs challenge the company status.
If a company is deemed to be a service provider, then the remuneration is worked out by deducting a fixed amount of expenses from the turnover, then any expenses that would have been allowable as an employee. The resulting figure is then deemed to be gross pay plus employers NI. The PAYE and NI for the tax year have to be paid by the 19th April after the tax year.
It is not always obvious whether a service company will be caught by the IR35 legislation and professional help should always be sought to avoid significant problems. We can access various ways of ensuring your contract does not fall foul of IR35 legislation.
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