HMRC has released new guidance to help contractors understand IR35. The guidance can be found here and covers a number of topics including, 'How to work out if IR35 affects you' and 'enquiries by HM Revenue and Customs.' It should be noted that the IR35 rules themselves have not changed.
IR35 applies if you're working for a client through an intermediary (like a Personal Service Company or 'PSC') and in reality, you work in the same way as an employee of the client. IR35 considers the underlying nature of your working relationship with a client. Even if you call yourself 'self-employed' or believe you have an 'IR35-proof' contract, you may still be caught by IR35. IR35 will also apply if you're regarded as an 'office-holder' of the client.
If you are found by HMRC to be inside IR35, you will be asked to pay roughly the same amount of tax and national insurance contributions (NICs) as if you had been directly employed by the client. Credit will be given for any tax paid to date. The difference can be as much as 15% of the PSC's revenue. If you get your IR35 status wrong, interest and penalties may also be charged on any late payment of tax and NICs due or as a result of an HMRC enquiry into your situation.
PayStream's Compliance team is on hand to help you navigate this complex piece of tax legislation. As part of our IR35 service, we can review the contract(s) involved and your working practices and let you know if we think that you are caught by IR35. We can also help you interpret your results on the Business Entity test; a test which HMRC uses to gauge whether it is worth starting an HMRC enquiry. For PayStream contractors the service is free.
If you need any help or assistance with IR35, please contact us on 0161 929 6000 or at firstname.lastname@example.org.