Introduction to IR35
HM Revenue and Customs (HMRC) introduced the ‘intermediaries legislation’, which became known as IR35, in the 2000 budget to combat “disguised employees”. The term refers to individuals using a limited company to provide their services, who pass the employment tests, and if, were it not for their limited company, they would otherwise be employed by their end client.
In 2017 the Government shifted the responsibility of determining contractors’ status to organisations in the public sector.
In April 2021 the same reform has been rolled out in the private sector. From this date, medium and large businesses (and similar unincorporated bodies) hiring contractors are now the ones liable to determine their off-payroll worker’s status; if you are in engagement with a small business, then the assessment process stays with you – the contractor.
Contractors Inside IR35 – Working with SmartWork
If a contract is deemed to be inside IR35 working through an umbrella company such as our sister company SmartWork could be the perfect solution.
The primary function of an umbrella company is to organise payment for fixed-term work undertaken by independent contractors. When signing up with an umbrella company such as SmartWork, contractors become one of its employees acting as an intermediary between them and their agency, or directly the end client if no agency is involved.
SmartWork will provide a full package with a host of additional benefits.
- Processing of statutory sick pay, maternity/paternity and holiday pay.
- Can assist you with mortgages advice and references through partner discounts.
- Insurance is included to cover you for all of your work-based insurances, including Professional Indemnity and Employers/Public Liability.
- Just like us, they pride themselves on providing personalised service with a dedicated business manager allocated to each contractor.
- Contractors can upload timesheets, submit expenses, and e-sign documents easily through the SmartPortal.
- SmartWork is also a fully accredited FCSA member, undergoing a yearly audit demonstrating their compliance with the trade body’s strict code of conduct.
Umbrella & Limited Dual Service
Should your current engagement fall inside IR35 and you wish to keep your company for contracts outside IR35, we offer an option for you to do just that. With a fixed monthly fee of £95+VAT, we will oversee your umbrella income and look out for your limited company, so that it is ready for you to pick up where you left off.
It is important to remember that despite the legislation changes, working outside IR35 and via a limited company is still the most tax-efficient way of trading.
How can we help with your IR35 queries?
As a compliant accountancy practice, we have a duty of care to our clients when it comes to IR35, and keeping them updated with all legislation is a part of that commitment.
For your review and insurance needs we’ve teamed up with IR35 specialists Qdos Contractor, who have the knowledge, and expertise to conduct a full contract review granting you complete peace of mind. Trusted by over 40,000 UK contractors, Qdos offer a comprehensive range of policies, including professional indemnity, public & employers’ liability, tax liability insurance and much more covering the key risks you face every day.
They offer a 10% discount and FREE IR35 assessments to MyAccountant clients when you purchase insurance – an excellent way of demonstrating that you have operated due diligence in determining if your IR35 status.
Make sure that you contact your accounts manager for more details and get your unique code for the offer.
We are posting regular updates on our blog that can be followed via our LinkedIn page, but if you’d like to know more or need help with IR35, feel free to give us a call on 0800 917 9100 or e-mail email@example.com.