The IR35 rules that came into effect in April 2021 and are there to stop contractors obtaining tax benefits through their limited company if they work in the same way as employees of that same company.
If you are a contractor worrying about how an end client insists that you work on site, then here is some help for you to better understand your status read on.
How to determine your status
Before April 2021 as a contractor working in the private sector – you determined your own status. This is now dealt with by the client who you work for. There are a few things which need to be considered to do this, including details outlined in written contracts and working practices.
HMRC has the power to inspect the decision and can investigate further if they believe that a contract has been incorrectly determined. The end client therefore must be extra careful and must demonstrate reasonable care when dealing with the assignment of your status .
Factors that impact IR35 Status
Ultimately the decision is yours as to whether you take the job or not as this will affect your income.
The following factors could lead to an inside IR35 determination.
When you work for a single client for a long period of time
Benefits such as holiday and sick pay included in your working hours
Not having a separate business identity
Using the equipment which is supplied by the client
The client supervises you very closely
Working from the clients work site on a regular basis
The following factors could lead to an outside IR35 determination.
Working for various clients at the same time
You have your own business , branding and insurance You decide how and when you work and have control over delegating tasks to others
Using your own equipment
Being paid a fixed or on a project-by-project basis
No employment benefits
Usually working from your own site
Keeping control
It is important that you keep a clear eye on your status either inside or outside the IR35. HMRC have the power to investigate cases going back six years and carefully look at your status and contracts.
They can also demand income tax and National insurance contributions plus interest on these payments AND in some cases even penalties for the wrong determination in the first place .
Although you cannot determine your own IR35 status you must ensure that you are working in a way that you keep control of all your paperwork and review it on a regular basis.
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