The IR35 rules were brought in by the Government to prevent companies laying off staff, only to take them on again in exactly the same jobs as contractors, so avoiding having to pay National Insurance and tax for them. This issue was impacting on the employment rights of the staff as well as becoming a tax loophole for companies, so the Government stepped in. IR35 stands for the “Intermediaries legislation” and it is a group of regulations set down by the Government which impact on tax and National Insurance contributions if you are contracted by an intermediary to work for a client. You might fall under IR35 if you work in this way, whether the intermediary is your own company, a partnership or a service company. In summary, if you employ someone as a contractor and they claim to be self-employed, but your contract is their only source of income and dictates when and how they work, the HMRC will deem them not to be self-employed but falling under IR35 instead.

One of the key areas which distinguish the IR35 from being self-employed is the right to dictate when and where you work yourself, rather than being told what to do directly by a boss. If you are self-employed you should be able to set your own working terms, so it is elements like this which need to be clearly detailed in the contract. We can assist you with all matters relating to IR35 rulings so please contact us to find out more.