Herts, UK -- (SBWIRE) -- 05/21/2012 -- Fundamentally nothing has changed the legislation surrounding IR35 remains the same as it always has. The tests merely appear to simplify the early stages of any potential investigation, contractors, freelancers and other Limited company owners who may be affected by IR35, still need to provide evidence/information demonstrating the necessary level of control and financial risk that is inherent in running any legitimate Limited company.
What is IR35? IR35 is legislation introduced by the government to simply counter what HM Revenue and Customs (HMRC) class as disguised employment. The aim was to prevent people leaving full time employment and then returning to the same job immediately as a contractor working through their own Limited company without taking on the full responsibilities of Limited company ownership.
HM Revenue and Customs make company ownership attractive to aid small businesses and encourage entrepreneurship, after all employees do often give up significant employment benefits to make the move to contracting, so any tax benefits are only a fair swap. Outside IR35 To be outside IR35, you will need to show that you are working with the same level of responsibility, control and risk as other Limited company contractors. The most basic way to check this is to talk it through with your recruiter or have an expert review your contract (to find out if your contract falls inside or outside IR35 you can send it to SJD Accountancy and we give you a free verbal review), obviously you'll need to ensure your working practices reflect your contract.
Inside IR35 If your contract and working practices reflect those of an employee there may still be a benefit to working through your own Limited company but it best to check with an expert (again we'd be happy to help). Working inside IR35 through a Limited company means you can still claim: travelling and accommodation expenses, 5% of your turnover, benefit from the VAT flat rate scheme (saving around £2,000 a year), and receive interest on the funds held within your own company.
For more information about IR35 please read our full guide to IR35. If you have any questions about contracting or would like any further advice please contact our New Client Services helpdesk on 0500 152500 / 01442 275789 or email email@example.com.
About SJD Accountancy
SJD Accountancy are the UK's largest specialist provider of fixed fee, limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 11,000 clients.