IR35 and CT

[munglefish]

Hi all,

Apologies if this has been covered, but my search came up empty!

If a contract is deemed inside IR35 after a HMRC review and there is a tax payment due, does the amount of corporation tax paid during the company year get taken into consideration? From my understanding, if inside IR35 and under PAYE then corporation tax does not get paid. So if paying CT, thinking you are outside IR35, and have to pay up - is there some kind of funky calculation which offsets the tax due using CT paid?

Hope that makes sense...

[malvolio]

Wrong way round. CT is paid on gross profits. If, after paying your PAYE salary under IR35 and any allowable business expenses out ofhte %% there's anything left - usually there isn't - you then pay CT on it.

If you lose an IR35 case, the whole tax picture is recalculated, and the new bill worked out taking CT already paid into account. After all, IR35 tax isn't really PAYE/NICs, it's a tax on the company that just happens to be the same amount as PAYE/NICs would have been.

Where you will lose out is the NICs you haven't paid on any dividends you declared, and any higher rate tax.