IR35 has proven to be an exceptionally controversial piece of legislation, and scarcely a month passes without it attracting some form of negative publicity. Recently, according to Contractor Calculator, the Lords have criticised the utility of IR35 with regards to tax-raising, and HMRC have thus been called upon to re-assess the suitability and the impact of the legislation. IR35 is primarily intended to function as a deterrent in nature, and with this status now in doubt PCG have now called for the legislation to be suspended.
This call has been fuelled by the reluctance of HMRC to outline exactly how IR35 is serving in the capacity that it is supposed to be doing, and this situation merely represents the latest in a long list of similar requests to see IR35 ultimately abolished. However, it is this long standing discontent that has resulted in numerous parties becoming almost resigned to the continuing enforcement of IR35. This legislation has already survived so much criticism in the past, and many disenchanted contractors have almost lost hope that the state of play will ever be amended.
At least for the present, IR35 is here to stay, and so contractors must continue to battle with the challenges that it poses. IR35 is designed to tackle the problem of ‘disguised employees’, and so it is within most contractor’s interests to prove that they are ‘self employed’ in response. This status means that your income – or at least a proportion of it – will be protected from the PAYE imposed taxation that is required of those who fall inside IR35. Many of the problems surrounding IR35 result from confusion over the ‘employment status’ guidelines, and so it is essential to receive professional guidance when dealing with this legislation.
Here at ICS, we can offer detailed advice and a free IR35 contract review. We also have a comprehensive IR35 Guide which can be downloaded here. It is a common misconception that you cannot work though your own limited company if you feel you’re caught by the IR35 legislation but this is not the case. Please contact our team on 0800 195 3750 to discuss your personal situation.