Reply to: Very, very, very urgent IR35 advice needed please!!

[Denny]

FFS how long does this thread need to be?

The Intermediaries Legislation (IR35) applies to workers using an intermediary (a limited), hence it does not and cannot apply to a sole trader. End of story.

The IR can challenge any self employed workers status (sole trader) and seek to obtain tax and NI as if they were an employee. If they won't cough up, the simply demand it from the company that is "employing" them, hence why no sensible client of agent will deal with sole traders.

End of

That's what they think?

I've dealt as a sole trader for about 3-4 years when I started up this game, only I went through a third part brolly - that was recommended me from an EB but who always paid my gross minus the timesheet handling admin charge. Still, what they don't know, can' hurt them.

[tim123]

Sole traders seem to be exempt on the face of it, but I can't believe that someone in a classic Friday-to-Monday scenario could get away with it. To be a sole trader, you need to convince the tax man you are genuinely self-employed - and the OP clearly won't be.

They don't, but the liability for the extra tax sits with the (deemed) employer.

This is why most employers will not employ an SE contractor for the type of work that most posters to this board perform.

tim

[wendigo100]

You have got to be kidding.

Which bit of a fox - the anus?

Don't knock it til you've tried it.

[bogeyman]

There was a time when I thought she was a bit of a fox. Are you telling me she's now past it?

You have got to be kidding.

Which bit of a fox - the anus?

[wendigo100]

By the way,

I saw your namesake on the telly the other night for the first time in years (I think they try to keep her in the treasury attic where possible).

The loathsome Dawn Primarolo was being questioned about some tax/pension issue and by God she looked as though she was about to foam at the mouth.

Her skin and eyes looked slightly jaundiced and her hair was a total mess (or so Mrs BM informs me).

There was an air of angry desperation in her voice: both defensive and pleading - like a cornered vixen.

Who the hell votes for this pathetic bitch?

There was a time when I thought she was a bit of a fox. Are you telling me she's now past it?

[wendigo100]

FFS how long does this thread need to be? The Intermediaries Legislation (IR35) applies to workers using an intermediary (a limited), hence it does not and cannot apply to a sole trader. End of story.

Exactly what StackPole said about 20 posts ago.

If this was the PCG, this thread would have ended after three posts, and one of them would be the bloke who started it saying "thank you". They know all about IR35 over there.

[bogeyman]

FFS how long does this thread need to be?

The Intermediaries Legislation (IR35) applies to workers using an intermediary (a limited), hence it does not and cannot apply to a sole trader. End of story.

The IR can challenge any self employed workers status (sole trader) and seek to obtain tax and NI as if they were an employee. If they won't cough up, the simply demand it from the company that is "employing" them, hence why no sensible client of agent will deal with sole traders.

End of

By the way,

I saw your namesake on the telly the other night for the first time in years (I think they try to keep her in the treasury attic where possible).

The loathsome Dawn Primarolo was being questioned about some tax/pension issue and by God she looked as though she was about to foam at the mouth.

Her skin and eyes looked slightly jaundiced and her hair was a total mess (or so Mrs BM informs me).

There was an air of angry desperation in her voice: both defensive and pleading - like a cornered vixen.

Who the hell votes for this pathetic bitch?

[DimPrawn]

FFS how long does this thread need to be?

The Intermediaries Legislation (IR35) applies to workers using an intermediary (a limited), hence it does not and cannot apply to a sole trader. End of story.

The IR can challenge any self employed workers status (sole trader) and seek to obtain tax and NI as if they were an employee. If they won't cough up, the simply demand it from the company that is "employing" them, hence why no sensible client of agent will deal with sole traders.

End of

[The Lone Gunman]

IR35 does not apply to sole traders.

Sole traders are governed by the original rules that have been in place for ages. Look at the IR web site.
There are tests to check if you can regard yourself as self employed.

[wendigo100]

To be 100% with the letter of the law you are right, IR35 does in theory apply to sole traders BUT in practice it is totally immaterial as the design of sole trader entities plus older regulations were created with the same aims (tax "correctly" disguised employee's) .

IR35 does NOT in theory apply to sole traders. It cannot by definition, because a sole trader is not using an intermediary.

[Not So Wise]

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?

To be 100% with the letter of the law you are right, IR35 does in theory apply to sole traders BUT in practice it is totally immaterial as the design of sole trader entities plus older regulations were created with the same aims (tax "correctly" disguised employee's) .

Sole traders claim everything after expenses as employment income and thus already pay pretty much full wack in Tax/NI

Where ir35 was more designed to catch out contractors, sole trader regulation is designed to catch out employers who were getting people to go sole trader so the client could avoid Tax/NI/legal obligations

From the individuals point of view (financially) the only real difference between being an sole trader and an employee is that you can claim more things as business expenses, everything else gets taxed pretty much the same. This is one major reason anyone contracting who is not a disgusted employee really should go ltd, other is the limited liability that the ltd provides. If they are a disguised employee then they should actually become a real one because the employee is in a much situation than the sole trader.

From the clients point of view, though they save money as no employment obligations, if the tax man deems the contractor a "disguised employee" it is generally the client/agency who ends getting hit financially not the contractor (thus a total reverse from IR35). And this is the reason most companies/agencies will not touch sole traders with a barge pole

[malvolio]

Sorry - after looking up HMRCs notes, you're right.

IR35 applied to limiteds AND partnerships (both of whom might be considered intermediaries).

Sole traders seem to be exempt on the face of it, but I can't believe that someone in a classic Friday-to-Monday scenario could get away with it. To be a sole trader, you need to convince the tax man you are genuinely self-employed - and the OP clearly won't be.

Which is what I said. He may find when he goes to register that Hector will insist he is taxed as an employee - which is what IR35 is all about, ensuring you don't cop out of employment-level taxes by having a pretend company in the loop.

[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.

Sorry - after looking up HMRCs notes, you're right.

IR35 applied to limiteds AND partnerships (both of whom might be considered intermediaries).

Sole traders seem to be exempt on the face of it, but I can't believe that someone in a classic Friday-to-Monday scenario could get away with it. To be a sole trader, you need to convince the tax man you are genuinely self-employed - and the OP clearly won't be.

[malvolio]

Wrong, but never mind.

Also note that you now have to register as a sole trader immediately, and the taxman may take a different view about the reality of your proposed working conditions. I think the OP may be in trouble

[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?