INSUBCONTINENT EXCLUSIVE:
In March, the Government announced that due to the disruption cause by the ongoing pandemic, it was shelving long awaited and feared changes
April 2020 and have now been deferred until April 2021.What is IR35 all about?The so called IR35 legislation was introduced in 1999 to deal
with discrepancies in tax treatment between employees and individuals who provide their services via a personal services company, wholly
owned by the individual consultant or contractor (referred to as the contractor for the purposes of this article).An employee will receive
Insurance obligation, it can be more cost effective for companies to source some services via contractors, rather than to employ staff
to which corporation tax arises, thus avoiding or minimising higher rate tax thresholds.The 1999 changes, which remain in force and are
company would be deemed to be employment income, leaving the limited company liable to pay employers National Insurance Contributions on the
sums paid, regardless of whether they were paid a salary or dividend.Who falls within IR35?The basic test HMRC applies is whether it can be
said that, were it not for the involvement of the Contractor company, the individual supplying services would be an employee of the client
a sigh of relief at the deferral, it is important to note that for the contractors, the position is rather different
The existing IR35 rules have not changed and it is reasonable to expect that HMRC will turn its gaze on compliance with those rules by the
limited company contractor population
In preparing for the introduction of the broader changes, HMRC stated clearly that if limited company contractors opted to treat themselves
as within IR35 from April 2020, HMRC would not necessarily look back at prior years
That may suggest that contractors who do not willing embrace the IR35 regime now may find themselves under closer scrutiny from HMRC, who
will surely be under pressure to raise elsewhere the revenues they had anticipated from the changes.Yvonne Gallagher is a partner at
