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Your Source for IR35 Information

 

IR35 Advice Centre

IR35
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Contact Qdos Contractor:0116 269 0999
 
 

Expert IR35 Advice, Guides and Latest News

 

IR35 Advice For Contractors

The IR35 or Intermediaries Legislation was first introduced in April 2000 with the aim to address tax avoidance by individuals working in the role of an employee through an intermediary, such as a limited company. Working in this capacity is sometimes referred to as a "disguised employee" and enables individuals to avoid tax and national insurance contributions which HMRC intend to recover.

Qdos have been defending contractors against IR35 for over two decades, having successfully defended over 1,600 cases and completing over 150,000 assessments for IR35 status, becoming one of the most trusted opinions on IR35.

Here you will find the latest news and advice, resources, and services to help you understand the IR35 rules and stay compliant with the IR35 legislation, whether working  inside or outside IR35.

What is IR35?

 

IR35 is a tax legislation which forms part of the Income Tax (Earnings and Pensions) Act 2003 ('ITEPA'). It applies to workers of personal service companies (limited company contractors) who provide services to clients via their own limited company but whose working relationship with the client is more alike to permanent employment.

Those providing what is seen as a genuine B2B service are able to pay tax more efficiently through the use of low salary and dividend payments. HMRC seeks to identify any worker using such an arrangement but providing what is seen as more of an employee provision in order to reclaim the additional tax and national insurance contributions the worker would have paid if employed by the client.

HMRC may choose to carry out an enquiry on anyone they suspect to be "caught" by the legislation. Following this process, HMRC will calculate the individual's total income for the period in question as salary and attempt to recoup the applicable tax and national insurance contributions previously paid as dividends.

IR35 CHANGES APRIL 2021 

 

Changes to IR35 mean that from 6th April 2021, contractors will have their status determined by their engager (with the exception of those engaged to a 'small' client in the private sector).​ If you are an engager or agency seeking advice or services, please visit our commercial site

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What do you need to do as a contractor

 

​What are the IR35 rules?

In simple terms, if you are a limited company contractor, you will need to assess your employment status for tax purposes (IR35 status) and pay the relevant tax to HMRC according to this status. The rules are different if you are working with a client in the public sector, and will change for the private sector from 2021 - see more information on these rules below.

So how do you assess your status?

The legislation is based on historic case law which means that each significant case which goes before a judge can change how future cases are assessed. For the best part of the legislation's life however, there have been three key tests which remain vital in determining status today; the right to provide a substitute worker in order to fulfil the contract, control over how the contract is delivered, and the lack of existence of a mutuality of obligations between the parties.

Using these three tests plus numerous other factors to view the nature of the relationship as a whole, Qdos, HMRC, and the courts can determine the status of a contractor operating as a limited company. This is usually done by reviewing the written terms and conditions of the contract, as well as the working practices which is how the contractor and client operates in reality.

Understanding whether an individual falls under IR35 is complex and can have significant consequences should HMRC determine that tax is owed. To protect from being forced to pay back thousands of pounds, workers should consult specialist experts like Qdos to undertake an IR35 review and consider taking out insurance.​

Contracting in the public sector

 

If you are a contractor working for a client in the public sector such as a government body, the NHS or a school or university, the public sector body is responsible for determining your IR35 status instead of yourself as the contractor.

These rules are often referred to as the 'off-payroll rules' and mean that the public sector body must assess your employment status for tax on your behalf. All of the above status tests and factors still apply but it is the responsibility of the client to make the decision.

Should your client determine that you are operating inside IR35 which means that you are considered as an employee for tax purposes, then the fee-payer (the entity which directly pays your limited company), will be required to deduct the relevant tax and national insurance from your fee and pay this to HMRC directly.

These rules came into force on 6th April 2017 and are subject to some small amendments in line with the private sector reform in 2021 - see opposite.

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Contracting in the private sector

 

If you are a contractor providing services to a client in the private sector (any UK business which does not constitute as a public sector body), then you must assess your own status and apply the applicable taxes. This is however scheduled to change from 6th April 2021.

From April 2021, the current rules (which place the responsibility of applying IR35 on the contractor) will remain where you are contracted to a client classed as a small company under the Companies Act 2006. Your client will be required to provide you with the information to confirm this on request.

If however you are providing services to a client which classes as a medium or large company - the off-payroll rules will apply. This means that the client will be responsible for determining your status and the fee-payer must deduct the relevant tax and national insurance from your fee, paying this to HMRC on your behalf. This follows the same rules applied in the public sector in 2017.

The off-payroll rules will include some additional requirements from 2021. This includes a disagreement process and a requirement for the client to provide a status determination statement.

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Latest IR35 News & Advice

 
 
 

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The Company

 

About Us

Why Qdos?

 

We are the leading specialist on the IR35 legislation, completing over 150,000 status assessments and successfully handling over 1,600 status enquiries on behalf of contractors, saving them over £35million in tax. With two decades' experience specialising in IR35, Qdos were at the forefront of off-payroll reform (IR35 reform) in the public sector, providing fair and compliant assessment and support services to over 2,000 clients and agencies and ensuring over 9,000 contractors continue to receive fair assessment of their status.

 

Our History

 

Qdos began in 1988 as a tax consultancy business and has grown significantly over the past two decades, providing expert business services, products and advice. Over the years, Qdos has grown in both size and reputation as a trusted contractor insurance broker as well as an expert tax advisor. Our aim is to provide UK contractors with the assistance and service with IR35 issues they need as well as sustaining excellent quality and competitive premiums in the contractor insurance market.

Expert IR35 Consultants

 

We have been specialising in the IR35 legislation for over 20 years - since the legislation was
introduced - and are widely considered a leading authority on IR35 status. We have successfully defended over 1,600 IR35 enquiries, and our team of IR35 consultants have reviewed over 150,000 engagements for IR35 status through written contract and working practice assessments.

Our Head of Tax, Nigel Nordone, has personally represented hundreds of clients under IR35 enquiry over the past two decades, and as a former HMRC Inspector of Taxes specialising in IR35, tax investigations, status, PAYE and employer compliance, Nigel has first-hand experience in HMRC’s handling of enquiries.

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