What is IR35?
Are you and your business prepared for IR35? Confused? Worried? One thing you absolutely cannot afford to do is stick your head in the sand and hope it will go away, it won’t.
ICS Accounting’s experts have been advising on the IR35 legislation change since its inception, ensuring we’re up-to-date with the latest and upcoming legalisation, with the expertise and tools in place to guide you through it simply and compliantly.
IR35 was introduced in 2000 to tackle what is described as “disguised employment”‘ or “off-payroll working”, where people are fundamentally working as employees are hired as contractors via a limited company, thereby sidestepping correct tax liabilities.
This could be over prolonged periods or short fixed-term contracts and projects. Reactively few actions were pursued over the two decades since, leading to a (risky) sense of complacency among many. However, with disguised employment losing the Treasury an estimated £1.2 billion in revenue annually, the government are now taking decisive action to close the loophole.
IR35 in the private sector received a ‘soft launch’ in April 2021, giving businesses the heads-up and time to put their house in order. However, many have not, either through complacency, confusion, lack of awareness, or genuine genuinely believing that IR35 does not affect them.
With April 2022 marking the end of the soft launch, contractors must be correctly categorised in one of two ways: outside IR35 or inside IR35, meaning the contractor would pay income tax, PAYE and National Insurance contributions in the same way as an employee.
While some end clients may have been breaching rules due to a genuine lack of awareness or good faith, they are ultimately responsible for ensuring contractors are correctly classified, not the contractor, especially with proactive investigations and robust legal action now being taken by HMRC.
Could IR35 affect me?
In short: yes. High profile IR35 cases in the media, including Lorraine Kelly, Adrian Chiles, and Gary Lineker, show no one is outside the IR35 spotlight. At the very least, checking and acting now to ensure your business is fully compliant can save time and costs, up to potentially brand-damaging legal processes and judgements.
Fully conversant with this legislation since 2000, our team of experts confirms it has the scope to affect everyone. For freelancers, small, medium and large companies, it is vital to check whether and how you could be affected and put any appropriate actions in place as soon as possible.
Your next steps made simple
IR35 is a complex tax legislation which is easily misunderstood and can be administered incorrectly. It is an area that’s absolutely not worth the risk of getting wrong. Having specialised in IR35 tax, ICS Accounting has built up a wealth of expertise and experience, providing practical advice and resolution for businesses, contractors, freelancers, recruitment agencies and limited companies.
Go to our IR35 page to access our free guide to IR35 and to start your personalised free role assessment.
Whatever size of business or workforce, ICS Accounting is here to advise and assist with all your tax and pay queries; call our friendly team on 0800 195 3750 or email firstname.lastname@example.org.