It's shorthand for some tax legislation that applies to owner-managed companies.
It began in 1999, when HMRC found that there were recurring instances of employees leaving their jobs on Friday and coming back on Monday, engaged through their own companies. This suited who they worked for as there was no employer's national insurance to pay, and the loss of rights to holiday and sick pay was compensated by a higher rate for the worker.
What really annoyed HMRC was that those ex-employees (now contractors) were doing exactly the same work, sat at the same desk, keeping the same hours.
So, if you are found to be really an employee, IR35 allows HMRC to ignore the company and to tax the individual on the gross amount paid.
There have been plenty of cases in the courts, which HMRC have lost the majority. The arguments are well documented, but what we aim to do is to make sure your contractual arrangements do not fall within IR35. That's why we offer a contract review service and discuss your situation at the start.
To keep up to date with news on this and related company subjects, we recommend www.companybug.com and www.contracteye.co.uk. Please ask us about anything you have read, that you think may have a bearing on your business.
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