Very, very, very urgent IR35 advice needed please!!

[stackpole]

FFS are you all taking the piss?

Why doesn't someone just tell this 530iM dude that if he carries on as a sole trader, IR35 doesn't apply to him. End of story.

[expat]

Not confused, I just dont know..


If a LTD company takes on a contractor ( who is also LTD company), if IR35 requires m or tax to be paid, then HMRC will chase the contractor.

If a LTD company takes on a contractor ( who is a sole trader ), if IR35 requires more tax to be paid, then HMRC chases the LTD company who employed the contractor.

I am sorry if I come accross as confusing, but if abnyone knows if the above statements are correct, please let me know.

Regards.

HOW would IR35 "require more tax to be paid"?

IR35 says that:
- IF a person contracts to a client by means of an intermediary
- AND IF, were it not for the intermediary, the contract would be one of employment:
- THEN for PAYE and NIC purposes the contract is deemed to be (almost) one of employment.

So, does that apply? The "intermediary" in question is usually the contractor's Ltd Co. If you are a sole trader you don't have one. So the IR35 case does not arise.

HOWEVER... the question of whether you are "employed" or "self-employed" might well arise. This has been a question for sole traders long before IR35 (in fact IR35 more or less applies the same to Ltd Cos as was always applied to sole traders).

IANAL etc so I can't give you the answer. But I thought a bit of stand-back-and-look-at-it logic might help you get the question clear.

[miss marple]

I would go one step further than Stackpole and say

"This is one v. Big windup post"

Oh, sorry, Gordon - was that you?

[The Lone Gunman]

Sorry. Only just saw this.
I assume you have an accountant? Ask them!
IR35 only applies to Ltd companies.

Your client may get worried when they find out that they may become liable for any unpaid tax and NI should you do a runner which was reason 1 for only employing incorporated consultants in the first place.

[BobTheCrate]

530iM,

As others have already said, IR35 does not apply to sole traders.

IR35 is aimed specifically at what they call 'intermediaries'. Which is the Ltd company in between the client and contractor, namely the contractor's Ltd company.

No Ltd company, no IR35 - pure & simple.

Sole trader isn't a bad status to have at all, provided you can find clients willing to work like that.

OK you can't pay any dividend but you can re-invest in your sole trader business without any fear of IR35 saying "no you can't do that pre-tax".

[Not So Wise]

As a Sole Trader, are you people syaing that IR35 will not come into effect?

That would be correct, IR35 has nothing to do with Sole Traders. But the client is taking a risk taking on a sole trader, most companies/agencys refuse them for good reasons

[bogeyman]

That would be correct, IR35 has nothing to do with Sole Traders. But the client is taking a risk taking on a sole trader, most companies/agencys refuse them for good reasons

I'm fairly sure this is incorrect.

IR35 has nothing to do with the form of the business (sole trader, partnership, or limited).

It has nothing to do with whether or not you draw most of your income from salary or dividends.

IR35 has everything to do with whether or not you are 'in business on your account' or are 'deemed to be an employee'.

This applies to any type of business, even sole traders.

The clues are:

- Do you have more than one client at a time?

- Do you work mostly at client's premises or at your own?

- Do you use mostly clients equipment and resources or your own?

- Do you work directly to the client rather than through an agency?

- Can you substitute another person to do work in place of you?

If you can say "yes" to all of these questions, then IR35 won't affect you.

If it's borderline or mostly "no"s then you're fair game for HMRC.

Unless the rules have changed, this is my understanding or IR35.

Any experts care to comment?

[malvolio]

OK, I'm late (again...) but:

AIUI the OP is going from permie role to contract role doing the same job, aka Friday-to-Monday. Ergo, he is stuck with IR35 whatever legal structure he uses, since IR35 is a personal tax, not a business one (and yes, I l know it's actualy paid by the business but let's not confuse matters).

So the real answers are:

Yes you are totally stuffed by IR35. You cannot legally hand off your taxation liability to anyone else, you can of course charge more for your services to compensate.

Why the hell are you giving up all your employment rights and associated benefits if you aren't at least doubling your gross income? Salary/1000 is your starting point for a minimum hourly rate, go do the sums.

Why the hell are you considering going independent without understanding the financials properly?

S134C means you cannot work through an agency as a sole trader. In your case now, going direct, that is not an issue, but your next job will be problematic.

[wendigo100]

I'm fairly sure this is incorrect.

IR35 has nothing to do with the form of the business (sole trader, partnership, or limited).

It has nothing to do with whether or not you draw most of your income from salary or dividends.

IR35 has everything to do with whether or not you are 'in business on your account' or are 'deemed to be an employee'.

This applies to any type of business, even sole traders.

The clues are:

- Do you have more than one client at a time?

- Do you work mostly at client's premises or at your own?

- Do you use mostly clients equipment and resources or your own?

- Do you work directly to the client rather than through an agency?

- Can you substitute another person to do work in place of you?

If you can say "yes" to all of these questions, then IR35 won't affect you.

If it's borderline or mostly "no"s then you're fair game for HMRC.

Unless the rules have changed, this is my understanding or IR35.

Any experts care to comment?

This is not true.

All the above "rules" are irrelevant for sole traders.

IR35 is officially called the intermediaries legislation. For it to apply, you must be working through an intermediary, which is a limited company, and you must have at least a 5% shareholding in the intermediary.

The only place you declare to HMRC whether your company is subject to the IR35 legislation is on the P35 form. Sole traders don't do a P35 form.

This is how it has always been. It has not changed.

[bogeyman]

This is not true.

All the above "rules" are irrelevant for sole traders.

IR35 is officially called the intermediaries legislation. For it to apply, you must be working through an intermediary, which is a limited company, and you must have at least a 5% shareholding in the intermediary.

The only place you declare to HMRC whether your company is subject to the IR35 legislation is on the P35 form. Sole traders don't do a P35 form.

This is how it has always been. It has not changed.

With all due respect, I think you are wrong.

IR35 applies regardless of the legal form of the business.

Can you point me to some authoratative source that states otherwise?