IR35

What is IR35?

IR35 is the commonly used name for the set of rules which affect the tax and National Insurance contributions of anyone who works for a client through an intermediary. The intermediary can be your own limited company, service or personal service company or a partnership. IR35 was introduced in 2000 and was reformed in 2017.
To check if intermediaries’ legislation applies to you or a worker on a specific engagement, click on the following link:

https://www.gov.uk/guidance/check-employment-status-for-tax


Who Is Affected By IR35?

If IR35 affects you, then your intermediary has to apply PAYE and National Insurance contributions on the salary or wage it gives to you throughout the tax year. Certain rules are created to ensure that the correct rate of tax and National Insurance is paid for you.

IR35 applies in the following circumstances if you are working through an intermediary and you:
• or your intermediary, or client are outside the UK
• work in the construction sector
• have been appointed to a position by a company or organisation but don’t have a contract or receive regular payment
• work with your partner or spouse
• are working for a charity organisation, through an intermediary
For more information on what to do if IR35 applies to you, see the following link:

https://www.gov.uk/guidance/ir35-what-to-do-if-it-applies


Consequences of Ignoring the IR35 Rules:

The responsibility of complying with the IR35 rules lies with the intermediary. The director of a limited company or a member of a partnership must certify that all relevant legislation is followed and determine whether IR35 applies to any of his engagements or not.

If IR35 applied to any of the contracts worked on previously, and was not followed for some reason, the director or member of partnership is responsible for notifying the HM Revenue and Customs (HMRC) immediately, to reduce penalties. If IR35 is avoided on purpose, the penalties can be very severe.

For more details about IR35, refer to the Gov.uk website:

https://www.gov.uk/guidance/ir35-find-out-if-it-applies

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