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Upcoming changes to IR35 checks

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A guide to disciplinary proceedings within the accountancy profession

The IR35 tax legislation gives HMRC the power to challenge the status of contractors and aims to tackle tax avoidance by freelance contractors and the companies who appoint them.

The responsibility has always been on the contractors themselves to prove that they are not employed by the business who they are contracted by. However, from April this year, for medium and large businesses, this responsibility will be transferred to the businesses who hire them. Medium and large businesses are defined by HMRC as having a turnover of £10.2m, assets of £5.1m and an average of 50 employees. For smaller businesses who do not meet this criteria the responsibility will remain with the contractor. 

What is changing?

You must be sure that the contractor falls outside of the IR35 legislation, otherwise they will need to be considered for a role as an employee.

If they are still considered to be outside of IR35 nothing will change for you. However, if you do find them to be inside IR35 you will need to consider hiring them as an employee of your business. This of course will cost your business more in terms of contributions to pensions and national insurance.

If your business uses contractors you must identify:

  • Who the contractor is
  • What they do for your business
  • The terms and conditions of their contract with you.

Stephensons are working with Forths Tax who have a team of experienced IR35 advisors who can help you with your planning and decision making.

For a fixed fee Forths Tax can provide you with:

  1. An initial meeting to discuss IR35
  2. A review of the current working practices of the contractor
  3. A tax review of current contracts
  4. A risk review of all contractor’s statuses
  5. A calculation of the financial exposure of the business of IR35
  6. Written recommendations following the review.

Call now on 01616 966 229.