Navigating IR35
IR35, officially known as “Off-payroll”, is legislation that targets tax avoidance by contractors. Essentially, it is a set of rules determining whether a contractor is genuinely self-employed, or instead an employee “disguised” as a contractor for tax purposes.
What do you need to know?
IR35 determinations are to be done and completed by the business hiring the Contractor
The IR35 status of the Contractor dictates whether they are treated as an employee or contractor for tax purposes. Let’s compare inside versus outside IR35:
Inside IR35 meaning
The worker is classed as an employee for tax purposes. They’ll pay the same Income Tax and NICs as if they were an employee.
Outside IR35 meaning
The engagement has been deemed a genuine business to business relationship or contractor genuinely self-employed. As a result, they can fully reap the rewards of self-employment and remain responsible for paying their own taxes like Income Tax and National Insurance Contributions.
How Xpertise can help you hire contractors with confidence
IR35 Defender: Our free cloud-based solution provides a full IR35 compliance service with expert IR35 assessments, online management tool and free IR35 tax liability insurance cover for our clients
- We provide a full IR35 compliance service with expert IR35 assessments, online management tool and IR35 tax liability insurance cover for clients and contractors.
- Robust role assessments consisting of 12 questions, completed via the portal and reviewed by an experienced IR35 consultant
- Our Clients will meet their obligations of making a determination and taking ‘reasonable care’ in the determination process, whilst being reassured that a substantive audit trail underpins the entire process in the event of an HMRC compliance activity, and therefore reduce the risk of incorrect decisions.
- Enables Clients to hire outside IR35 contract resource with confidence and de-risks the chances of in-demand contract resources leaving.
- Tax Liability Cover to insure against the defence of an HMRC IR35 enquiry should the contractor be found to be “inside IR35” following an enquiry (£200k coverage per outside IR35 contractor)
Find out more about our cloud-based solution
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Through IR35 Defender, the organisation can ensure it meets its obligations of making a determination and taking ‘reasonable care’ in the determination process. Whilst being reassured that a substantive audit trail underpins the entire process in the event of an HMRC compliance activity. It enables organisations to hire outside IR35 contract resource with confidence and de-risks the chances of in-demand contract resources leaving.
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