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Where does IR35 Apply
If you run a limited company and supply contract services to a client you must consider IR35 if you hope to take contract income from the company in the form of profit payments (Dividends). If you fail to consider IR35 and you take dividends anyway you could leave yourself open to an IR35 investigation and possibly backdated tax payments in years to come. This could result in financial ruin if you don’t have suitable provisions to make payment.If you have secured a contract (or will do so in the future) and you would like to discuss IR35 and contract solutions such as Umbrella Companies and Contractor Limited Companies call Commonwealth Contractors now on 0800 294 4388 or Submit your details and we will get right back to you.
Determining IR35 Status
To prove that you are outside IR35 you need to satisfy certain self employment tests. To do this you need to analyse contract terms and conditions and actual day to day working arrangements. If you are not at the stage where it is possible to do this but would like a general idea you should ask yourself the following simple questions.You must think about each contract individually as some contracts may be deemed inside IR35 and others outside IR35.
If you can answer yes to all of the following questions it is likely that you will be considered self employed:
- Can you pick and choose what hours you work?
- Can you hire another person to deliver the services for you? If so do you pay them yourself?
- Do you have the final say on how services are to be delivered?
- Are you paid on completion of a particular fixed price project?
- Can you work at whatever location you like to deliver the services?
- Do you work for multiple clients at any one time?
- Do you use your own equipment to undertake the project?
- Can you make a loss on the contract?
- Are you required to fix any unsatisfactory work at your own expense?
If you answer yes to the following questions it is likely that you will be considered employed:
- Are you told what to do by a client representative?
- Do you have to work yourself rather then subcontract work to a 3rd party?
- Are you entitled to employee benefits such as a parking space or gym membership?
- Do you have to work on site to deliver services?
- Are you paid on an hourly or daily basis?
- Can you get overtime pay?
- Are you paid the same time each month? Payment at the same time if you happen to invoice at the same time can be different.
- Do you work rigidly set hours each week?
- Are you invited to staff events and functions?
