To avoid unnecessarily high tax bills, contractors operating through a limited company need to ensure that the terms under which they supply their services keep them safely outside IR35.
You can find out more about IR35 at our dedicated information hub but, in brief, it’s a body of tax legislation designed to prevent ‘disguised employment’.
If you are working as a contractor, it’s vital to ensure your status is beyond doubt – that you are clearly ‘outside IR35’ – or you could be faced with higher tax bills, and liable to make National Insurance contributions.
From April 2020, responsibility for determining and declaring your employment status rests with the end client (the organisation contracting your services) if they are above a certain size, which puts additional weight on the details of your contract.
How our IR35 contract review works
Our IR35 review is simple – all you need to do is provide us with the key documents including your contract through our secure portal. Then, one of our experts will review those papers and provide a detailed report that will:
- identify potential sticking points
- suggest changes to improve the clarity of your IR35 status
- help you understand the underlying principles of IR35
- compare your working arrangements to the terms of the contract
What we’ll test
Like a dry run for an HMRC investigation, we’ll ask challenging questions to test whether your contract passes the most important standard tests:
- The right to substitution – could you send someone else to complete
the work on your behalf?
- Mutuality of obligation – is your client obliged to give you
work and are you obliged to accept it, as an employee would be?
- Control – can you decide when, where and how to complete your
The benefits of a contract review
There’s no guarantee that if HMRC investigates it won’t decide that you are caught by IR35 but this expert check will give you the best possible chance of heading off such an outcome.
Having undertaken a contract review is, in itself, a positive indicator for HMRC, demonstrating that you are taking IR35 seriously and have taken reasonable steps to confirm your status.