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IR35 Resources

 

IR35 Jargon Glossary

We provide a lot of information and guidance around IR35, and often we may take for granted that not everyone is well-versed in the terms used when discussing such a complex legislation, perhaps leaving you even more confused. We have therefore outlined below the key terms and phrases used when discussing IR35 to help clarify.

If you feel we have missed any terms, please feel free to get in touch by emailing us here.

 

 

Agency/Recruitment Agency– the organisation through which the contract is obtained and administered

Arguable point – a reasoning which may cause an exception to the general rule, usually when discussing status tests

Case Law – refers to law and legislation based and developed using real life scenarios (cases)

Confirmation of arrangements - a written document which confirms the way in which a contractor operates on a day-today basis (working practices) from the end client

Deemed salary – the payment made by the director of an intermediary company to his/herself which is relative to the payment received by a permanent employee of the same description

Disguised employee – a limited company contractor whereby IR35 applies A.K.A being inside IR35

Dividends – the payment received by the director(s) and/or shareholder(s) from the company’s profits

Employment language – terms which are generally used when discussing permanent employment e.g. overtime, line manager

End client/user – the company/organisation for which the contract is ultimately fulfilled

Genuine contractor – a limited company contractor whereby IR35 does not apply A.K.A being outside IR35

HMRC – Her Majesty’s Revenue & Customs, the UK tax service

Indemnity – level of insurance cover

Inside IR35 – term coined to describe a limited company contractor whereby IR35 applies A.K.A a disguised employee

Intermediary – an entity which exists as a means of operation between the worker and engager

Intermediaries legislation – a piece of tax legislation implemented to tackle the tax avoidance of limited company contractors who should be classed as, and taxed like, a permanent employee of their end client

IR35 – the common term used for the Intermediaries’ Legislation. Also, the reference number for the press release issued by the then Inland Revenue (HMRC) which announced the legislation.

Liabilities – the amounts of backdated taxes due if caught by the legislation

Limited company – a private business where the owners’ debt responsibility is restricted to the amount invested

Limited company contractor – a worker, who is usually one and the same with the Director, who operates on a contract basis through a private business where the owners’ debt responsibility is restricted to the amount invested

Outside IR35 – term coined to describe a limited company contractor whereby IR35 does not apply A.K.A a genuine contractor

Sole trader – a worker who operates a business as an individual and is personally liable for all debts

Status tests – the generally accepted methods of deciding on whether a limited company should be considered a disguised employee or a genuine contractor. See IR35 Compliance Guide for explanations on the individual tests.

Substitute – an alternative worker who undertakes the operation of a contract if required

Working practices – the ways in which a contractor operates their business in relation to the IR35 status tests / the day-to-day working relationship between the contractor and end client

 

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