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This website is for education and information purposes only, is not intended to provide professional advice. This blog is written from a UK perspective. This site should not be used as a substitute for competent professional advice from a qualified accountant.
(Also note - Tax, Law and businesses can change quickly: always check the date of the post!)
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Category Archives: Working for yourself
As soon as you list your business in directories and telephone books, register a limited company or otherwise publicise your business, it can generate an overwhelming amount of unsolicited mail and cold-calling.
It has been possible for some time, to register a residential address and telephone number for the mail preference service and telephone preference service. Companies must check that the addresses/telephone numbers are not registered in these databases before making contact. Therefore, registering for MPS and TPS can drastically cut down on the amount of unsolicited mail and telephone calls. Both services are completely free, so don’t pay anyone who says they will do it for you!
It is also now possible to make a corporate registration for the telephone preference service (although, if you work from home and your home number is already registered, you cannot register it again for the corporate service)
For anyone frustrated by automated call-centres and endless “touch-tone” menu options, this great site, GetHuman.com, shows you how to get through to a proper human being.
The financial consequences of being inside IR35 are mainly (there are other consequences) you lose the tax-avoidance facility of dividends.
Essentially, if you are within IR35, you must calculate a “deemed payment” and pay NICs and PAYE (tax) on that deemed payment.
The tax-deductible amounts that you can claim in travel and expenses will also be affected.
HMRC publishes an introduction and a list of guiding questions to help you to decide whether you fall inside or outside IR35.
You will need to examine whether IR35 applies on a “contract by contract” basis. It is possible to have some contracts within IR35 and some outside IR35
The circumstances of your “intermediary” is also a factor. For example, if the intermediary is a limited company – who owns the shares and in what proportion?
The wording of your contract and your working practises are also factors. Although, it is worth knowing that there is no such thing as an “IR35-proof” contract. In the event of an enquiry, HMRC would examine the reality of your situation, not just your written contract.
If you are a “borderline” case, it may be worthwhile consulting an employment law specialist to examine your contract, working practises
(“Inside IR35” – IR35 legislation applies to your circumstances
“Outside IR35” – IR35 legislation does not apply to your circumstances)
Although, traditionally IR35 affected IT contractors and engineers, the legislation is not actually limited to a particular trade, occupation or business sector.
If you personally perform services for your customer, through an intermediary, but you could be deemed an employee of your customer if it were not for the existence of the intermediary, you could fall within IR35.
IR35 was first propsed in 1999 and was introduced into UK legislation in 2000. The primary aim has been to prevent the avoidance of tax and national insurance by trading through an intermediary (commonly a limited company) rather than being an employee.
Prior to IR35, individuals could form a limited company and invoice their “client”/”employer” and then have their own limited company pay them a minimum salary and take the remainder as dividends. This avoided national insurance and tax through PAYE on the dividend element.