The First Step To Suriving IR35

By: Antony..

The Intermediaries Legislation, more usually known as IR35, was first adopted towards the start of 2000. When it was introduced, it was supposed to stop workers from avoiding paying tax, and enforce the mandatory National Insurance Contribution (NIC). It would do this by forcing certain companies to pay the same tax as their employees.

Obviously, people have not liked this, especially freelancers who frequently take considerable risks in their business. Almost all freelancers are self employed, and so can easily be caught out by this new tax. A contract that is well phrased and clear will be fine, but the smallest mistake in word choice can be enough to sink you.

The easiest way to solve this is to get an expert to review the contract. There are plenty of experienced lawyers who would be willing to look it over, and the average price is just 120. Considering how important it is that you get this right, and what you will be charged if you get it wrong, it's well worth the price.

Before you send it off for review, I'd suggest you check some things yourself, just to see if there's anything that you obviously need to change.

1. Does your company bear the financial risks of failure? [Yes = Good]

2. Will your sound management be profitable for your company, in performing the contract? [Yes = Good]

3. Does your company have the right to send alternative personnel? [Yes = Good]

4. Is your company responsible for any bad debts? [Yes = Good]

5. Does your contract read "Contract for services" as opposed to "Service contract"? [Yes = Good]

6. Are you entitled to sick or holiday pay? [No = Good]

7. Is the relationship between you and your client one of "master and servant"? [No = Good]

8. Do you have mutuality of obligations with your client? [No = Good]

If you are a UK freelancer and all of the above check out in your case, then you might stand a good chance of staying outside IR35. But a word of warning about contracts: It's not just about WHAT is written, but also the WAY it is written. When reviewing contracts, IR35 experts look very closely at wording and phrasing. They know that poor wording can create a chink in your armour that the tax authorities can exploit.

So, step one in surviving IR35 is to get all contracts reviewed by an IR35 expert before signing. If the expert advises that the contract or part of it should be changed, get it changed before signing.

Article Source: http://www.dxarticle.com

This page has been provided by Home Loans Direct, and the Small Business & IR35 Contractor Accountants Antony J. Holdsworth & Co.

Please Rate this Article

Not yet Rated

Additional Articles From - Home | Finances

Bad Credit Loan-Don't Let Bad Credit Stop You From Getting A Loan - By : robert alexander galaxy
Credit Cards - Plotting a Course - By : Mike Strom
Credit Cards - Plotting a Course - By : Mike Strom
Credit Cards - Plotting a Course - By : Mike Strom
Credit Cards - Taking the Helm - By : Mike Strom
What Credit Rating Scores Tell a Potential Lender - By : Courtney Jaden
Credit Cards - It’s Never Too Late to Learn! - By : Mike Strom
Credit Cards - Taking the Plunge - By : Mike Strom
Credit Cards - Why Not? - By : Mike Strom
Catching Up With Credit Cards - By : Mike Strom

indexnav

Learn More.

Authors

Author Login

Submit Articles

Submission Guidelines

Publishers

Top Authors