IR35 was introduced in April 2000 in order to clamp down on “disguised employment”. This is where HMRC believes that people have set up artificial limited company structures in order to avoid tax, instead of working as a normal employee.
Where a company provides the services of a member of staff to a client (either via an agency or directly) and the terms are such that without the intermediary company, the individual would be an employee of that client, then IR35 comes into effect. The impact of any companies being caught by IR35 is that HMRC would seek to tax the company’s profits in the same way as a salary.
There are various factors and considerations which should be taken into account when deciding if the company falls within IR35 or not, and this should be looked at on a contract-by-contract basis.
If you are not sure if your company falls within this anti-avoidance legislation, speak to us for more information and advice regarding IR35.
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