IR35 rules, which apply where an individual which would otherwise be an employee provides their services through a limited company, have been around for several years now. The aim of the legislation is to stop the tax advantage gained where a director/shareholder of a company draws dividends instead of a salary, which incurs PAYE and national insurance.
It has been difficult for H M Revenue & Customs (HMRC) to undertake checks of companies who may be caught by the legislation, since there is no list of them to check. They would have to identify risks during their usual random compliance checks.
However, from 6 April this year, agencies, who find workers for an end user, will be required to make quarterly reports to HMRC listing all payments they have made which have not been subject to PAYE and national insurance deductions.
While the actual legislation remains unchanged, we feel that the number of IR35 investigations will increase as a result of these new rules.
Please contact David Swann on 01733 372681 or email him at: email@example.com if you wish to discuss how IR35 may impact on your business.