What is IR35? Media presentation brought to you by Tarpon Ltd
NET 85% OF YOUR INCOME: www.tarpon-uk.com 0845 643 1580 What is IR35? IR 35 comes from the 6th April 2000 Intermediaries legislation. It was first proposed in the 1999 Budget press release numbered IR35. Hence now commonly referred to as ‘IR35′. The aim of the legislation is to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries. Prior to the legislation, a worker could take the money out of the intermediary in the form of dividends instead of salary. The legislation ensures that, if the relationship between the worker and the client would have been one of employment had it not been for an intermediary, the worker pays tax and NICs on a fair basis. Who does it affect? The legislation itself is not targeted at any particular occupation or business sector. It applies in any business sector. The rules will apply to you if you answer ‘yes’ to both the following questions. Would you be an employee if you worked for your client directly and not through your company or partnership? Does the company or partnership you work through meet certain conditions regarding ownership of the company? What are the consequences of ignoring IR35? HMRC monitors compliance with the legislation to ensure that taxpayers do meet their obligations to pay the correct tax and NICs. Where HMRC find that the incorrect classification has been applied, they have a duty to ensure things are put right for the past and, where appropriate, for the …
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