IR35 aka the contractor tax

In April 2000 the HMRC introduced legislation called IR35, its purpose was to stop contractors dishonest the Treasury out of tax repayments. It was OK for certain businesses, and workers of these companies neglecting to pay their taxes, however the authorities saw that as a perk of their jobs, however IT contractors, who do they think they are not paying their tax, I I near;y was going to name a profession here however that may most likely be libellous, but I believe you already know which one I mean.

As IR35 was brought in, HMRC were rubbing their hands at all the money they were going to receive, and the contract recruitment agencies were getting nervous as they thought the world was going to come to an end. Nevertheless, the dyed in the wool contractors were simply attempting to work out how much they must pay to work out a workaround. There should be one, there is for everything else, even for Microsoft office.

This all happened as a result of individuals were having the audacity to leave a company they'd worked at for years, start their very own a new company, and after that get rehired as a freelance advisor at their former company. This had the impact of lowering their tax and Nationwide Insurance coverage liabilities. The implementation of this Contractor Tax introduced in laws such as a particular time needed to elapse before you could possibly be rehired at a company, you might not use the company amenities, there was a limit to how long you may work there on a single contract, in fact anything that might make you look like an worker of the company.

When it was first launched, accountancy companies, umbrella companies, and recruitment agencies, set out on a mission to develop IR35 compliant contracts. If they did not they might surely see a reduction in income. It was not long until contractors would ask if the contract would be IR35 compliant earlier than they even went to an interview. Life was getting a bit more difficult with the introduction of this contractor tax, however not impossible.

After a couple of years it all settled down, so much so that very few people know the issue ever existed, solely the contractors who had been there at the beginning. When you go to any umbrella company, recruitment agency, and even an accountant who specialises in dealing with contractors, they may routinely check for the legality of the contract without anybody asking. The HMRC torque took a whole bunch of contractors to court docket over the IR35, aka the contract tax, however I feel you'll be able to count their victories on one hand. I do probably not understand why the government got so upset with contractors, we have been just working inside the rules, and paid everything our accountants said us we had to, hold on hasn't somebody else said that recently. I remember who it was, no, sorry, libellous again.