Service Company

Are you affected by IR35?

You may have noticed on the new Self Assessment tax return that HM Revenue & Customs now ask if you are operating through a service company.

HMRC take the view that some consultants, engineers, non-executive directors and “one man band companies” who are currently treated as self-employed should actually be treated as employees of the end client and be taxed as such...

What does this mean for my business?

All contractors need to consider IR35 and should take action in order to protect themselves from it.

If you only have one or two clients to whom you provide your services to and trade as a limited company, then there is a risk that you will be caught by the legislation. If so this will severely limit the expenses that you would normally be able to claim through your company and also result in PAYE tax and National insurance being charged on your total income from these types of contracts. As a result, the option of receiving your earnings by taking a small salary topped up by dividends (on which you do not have to pay National Insurance), is closed to you.

What can I do to address this?

When it comes to IR35 the most important thing you can do is to seek professional advice. TaxAssist Accountants have experienced accountants and work in partnership with IR35 specialists who can review your contracts to make sure you do not fall foul of this legislation.