IR35 vs The Christmas Party

23rd October 2018
Written by Nigel Nordone

Don't let IR35 be the party pooper this Christmas

The Autumn Budget is just around the corner, due to take place on 29th October, which will be shortly followed by Christmas. Christmas party invitations are likely to have already been sent out and many contractors may wish to attend their end client’s Christmas party but may hold back from accepting due to the consequences this could have on their IR35 status.


What are the consequences

It is of significant importance to put this issue into perspective and remember that IR35 will rarely be considered on simply one factor alone, but rather several factors, and therefore by attending the client’s Christmas party or other social functions in isolation will not automatically place you inside of IR35. Socialising with the end client could benefit your business by being able to mingle with the end client’s staff in a less formal setting. The client may also be keen for you to attend, valuing the services your business has provided.

If there are other factors which could already indicate that you are part and parcel of the end client, then attending a social function such as the client’s Christmas party could be more significant, for example, as it would indicate that there are very few differences between you as a contractor and the client’s own employees. From an IR35 perspective it is crucial to be able to demonstrate clear differentials between a contractor and an employee.

Join in and enjoy…

You’ve worked hard all year and deserve to let your hair down and our advice would always be that it is perfectly acceptable to attend some social functions such as an annual Christmas party, however you could still consider certain aspects such as paying or contributing to the cost of your own ticket.  This would be a positive indication that you are treated differently, in comparison to the client’s own employees, and it will also remind the end client of your independent status. Reminding the end client that you are a genuine contractor could prove to be particularly useful at this moment in time, should HMRC go ahead with their plans to implement IR35 reform in the private sector from April 2019.

But don’t be complacent

Regularly considering your IR35 status is always useful, and has never been more important than it is now. Make sure that the key IR35 status tests - right of substitution/personal service, control and mutuality of obligation - all stack up in your favour. Should you need IR35 advice make sure that you seek such advice now and take the opportunity to discuss this issue with the end client.

It’s been a tough year for contractors, particularly for those operating within the public sector and IR35 should not be allowed to spoil the fun. Dot the i’s and cross the t’s and allow yourself to look forward to the festive period. For those whose minds cannot be put at rest so easily please do give us a call and would be happy to discuss any issues you might have.
Nigel Nordone
Written by
Nigel Nordone
Nigel Nordone is the Head of Tax at Qdos, after working for HMRC for over 20 years as a tax inspector. We’ve decided to forgive him for this little transgression as his knowledge of how HMRC handle enquiries and compliance checks is really beneficial for both Qdos and our clients. Nigel specialises in employment status and has personally represented hundreds of clients who have been subject to a HMRC IR35/employment status enquiry.

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