IR35 is a piece of legislation used by HMRC (Her Majesty’s Revenue and Customs) in the United Kingdom. It outlines two sets of tax legislation for contractors or freelancers working with clients.
This affects contractors who provide their services via an Intermediary, or Personal Service Company (PSC). It is used to combat tax avoidance by independent contractors and the companies who hire them.
Avoiding IR35 can be financially detrimental to contractors and clients. Any non-compliance can result in companies needing to pay income tax and National Insurance Contributions (NICs). The implications of not being compliant can be wide-reaching.
HMRC’s three key criteria to determine whether the IR35 rules apply. We have provided a summary of these rules to give you an idea of what to look out for:
Does your client determine what you do, how you do it, when, and where you complete your day-to-day work?
Do you have someone else who does the work or are you required to do it yourself?
Is your client obligated to offer you work, and are you obliged to take it?
Being inside IR35 means that your contract falls withing the off payroll working rules. In other words, you are taxed the same as employees of the company without the benefits of sick days, or holidays.
Being outside IR35 means you would be seen as a legitimate contractor and both the firm that has hired you and the HRMC would deem you as self-employed.
To learn more information about IR35, check out this article by Hiscox Knowledge Center.
Is your current contractor work force fully compliant? Do you have a paper trail of IR35 determinations for each contractor you have supporting you? What levels of insurance do your contractors carry? Are your umbrella partners FCSA accredited?
Mercury Hampton Contract offers a full turnkey audit solution that ensures all necessary compliance is in place, providing you with the peace of mind that you’re engaging your contractors correctly.
This includes a thorough appraisal of the three main IR35 measures:
Following your audit, you’ll have a fully compliant & streamlined process that can be applied to all current interims & future contractors hired into your business.
Mercury Hampton Contract offers you fully compliant, robust, and complete interim solution.
Whether you need a single contractor or an entire project team, we’ve the infrastructure, services and industry-leading search tools to help.
We can support any contract assignment in the marketplace, tender for contract lead projects in both the public and private sector, and resource positions falling inside and outside of IR35.
Our IR35 partner, Kingsbridge Contractor Insurance will check your IR35 status determination and processes, to ensure you’re engaging the contractor correctly for the duration of the assignment.
You can be confident you’re maintaining your flexible workforce, outside IR35 and inside the law.
We’ll also maintain a Zurich underwritten IR35 insurance policy which will protect the whole supply chain, including you, the fee payer, for up to £100k legal defence costs and £100k tax liability per contractor.
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