What is IR35

3 mins

You may have heard of IR35, or maybe you are wondering if it is another of those pesky HMRC forms? It’s actually a piece of HMRC legislation which affects some self-employed people. It’s all a bit complicated but never fear, DSR Tax Refunds are here to help you make sense of it all. And if you get to the end of this guide and you are still unsure of whether it has anything to do with you, give our friendly team a call on 0330 122 9972 and let is help you.

So, what is IR35?

IR35 was originally introduced by HMRC in 2000 as a way of cracking down on people falsely claiming to be self-employed and therefore taking advantage of more advantageous taxation regulations. These rules were introduced to stop being people being able to leave their job, set up as a Director of their own Limited Company and then go back to their original employer, but now as a contractor instead of an employee.

To stop this happening, HMRC set up a series of rules that apply to determine whether you really are self-employed or just trying to gain tax benefits from claiming to be. Unfortunately, these rules are rather complicated so it is possible to fall foul of them, even if you aren’t trying to pull a fast one! If you are worried about your own self-employed status, give our experts a call on 0330 122 9972 and let us help you out.

So, back to those rules. What HMRC are trying to work out is whether your working conditions as a contractor are the same as if you were employed by your client. So, they look at things like whether you can choose when or where you work, whether you get paid holidays or pension contributions and whether you have to do the work yourself or whether you can nominate someone else to do that work for you. Basically, it looks at how much control you have over your working conditions as opposed to your client.

Does it apply if you are employed through an intermediary?

It can do. Even if you are contracted through an agency or other intermediary, the IR35 rules may still apply to you if HMRC believe you are working as though you were employed by the client. Now it might be that your agency sorts out your PAYE and NI contributions for you, in which case you will most likely be ok and not subject to IR35.

So, what should you do if you get caught up in IR35?

Many people are tempted to rush out and close their Limited Company if they fear they are about to fall foul of the IR35 rules, and although this is understandable, it is better not to rush into any major decisions. Expert help can be of enormous help. Call DSR Tax Refunds on 0330 122 9972 to take advantage of their expert knowledge. But make sure that you don’t delay because HMRC can levy fines and penalties on those workers they believe have flouted the IR35 regulations.

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