Where's the flaw?

[DonkeyRhubarb]

Fair enough.

Btw, it was purely hypothetical as I'm not involved in contracting anymore.

[malvolio]

Husband and wife.

Wife sets up Ltd Co as sole director.

Ltd Co employs husband on lowish salary.

Contract between Ltd Co and agency for husband's services.

Wife draws all the dividends. (Husband only gets his salary.)

Does IR35 still apply?

No, got nothing to do with IR35 (why won't people learn what it means, FFS). But Ramsay might, if Hector was feeling vindictive, in which case the husband gets clobbered for full taxes on the gross since it is clearly his salary

However post-Arctic there is absolutely zero point in such an arrangement, unless the husband is disqualified from being a company director. And that doesn't stop him being a shareholder anyway.

[Clare@InTouch]

Per HMRC:

The circumstances in which the legislation applies

If you provide your services to a client (the end-user) via an intermediary, typically a service company or partnership, and the intermediary does not meet the definition of a Managed Service Company, then the IR35 legislation may apply to engagements with that client.

Broadly, it applies to those engagements where –

•you personally perform services for another person (the client);
•the services are provided not directly with the client but under arrangements involving an intermediary; and
•the circumstances are such that, if you had provided the services directly to the client under a contract between you and the client, you would have been regarded for income tax purposes as an employee of the client and/or, for NICs purposes, as employed in employed earner’s employment by the client.

In addition you must receive or have rights entitling you to receive a payment or benefit that is not employment income. "

HM Revenue & Customs:IR35 -The circumstances in which the legislation applies


I'd say you still meet the criteria. You're still going to receive benefits from the work that isn't via employment income by virtue of the fact that it's your wife who holds the shares and gets the dividends.

[DonkeyRhubarb]

Husband and wife.

Wife sets up Ltd Co as sole director.

Ltd Co employs husband on lowish salary.

Contract between Ltd Co and agency for husband's services.

Wife draws all the dividends. (Husband only gets his salary.)

Does IR35 still apply?