IR 35

With the potential to save around £12,000 pa in tax, most knowledge based contractors are usually interested in structuring their work practices to fall outside of IR 35.

All such businesses must assess their current working practices (example checklist) and decide which of the following options is most relevant to them:

• If it appears IR 35 does apply:
  • Accept that IR 35 cannot be avoided, and:
    • Comply with the prescriptive requirements of paying an actual or 'deemed' salary, or
    • Seek an Inland Revenue ruling on status, or
    • Cease trading through your own personal service company and transfer onto the payroll of an 'umbrella company' or 'composite company', or
    • Cease trading through your own personal service company and transfer onto the payroll of your client,
  • Amend your actual and documented contractual arrangements and actual work practices to keep outside of IR 35 - this is where we can help.
• If it appears IR 35 does not apply:
  • Seek an Inland Revenue ruling on status, or
  • Continually improve actual and documented practices to evidence your opinion that IR 35 does not apply - this is where we can help.

HM Revenue & Customs are currently 'challenging' whether the numerous umbrella and composite companies actually work in avoiding IR 35. Early signs are that HMR&C will be successful in the Courts, meaning that many contractors will now be interested in alternative methods of minimising their tax exposure.

One of our more popular IR35 accountancy services involves reviewing your current work practices and providing an opinion on how we believe HM Revenue & Customs would catagorise you. We will prepare a detailed report on the positive, neutral and negative aspects of your current working arrangements and make practical suggestions on improvements you may wish to consider, if commercially acceptable to both you and the client. This service is provided by an ex Inspector of Taxes, who now works for us as a senior tax manager. His Revenue experience of status disputes and his up to date knowledge of relevant case law make this a service that will usually pay for itself many times over.

Clients who are fearful that their IR 35 situation may be investigated by HM Revenue & Customs, through a corporation tax return enquiry or PAYE control visit, may wish to consider taking out our fee protection insurance.

Whether or not IR 35 applies, we offer a mix of services that most Contractors will need, as back office support, to run their business:

• Book-keeping,
• Payroll,
• VAT Returns,
• Company Secretarial,
• Statutory Accounts,
• Corporation Tax,
• Personal Tax,
• Pro-active tax, finance and business advice.

We intimately understand how important to you it is that you stay outside of the requirements of IR 35. We also understand how you need to be told the truth, even if it means IR 35 does apply and probably always will.

Whiting & Partners is a traditional accountancy practice, with much experience and expertise relevant to looking after the tax affairs of Contractors. We have decided not to create and run our own composite or umbrella companies. We feel that where other hybrid accountancy firms have set up and run such operations, the level of management fees they charge compromises their true independence for acting in their clients' best interests.

Practical Examples of our IR 35 Expertise

Preparing dormant accounts for Contractors who have transferred 'onto the books' of the client. Acting for IT Contractor clients who are geographically remote from us, by providing Sage ASP book-keeping services.

Operating the payroll and calculating the year end IR 35 'deemed payment' adjustment. Corresponding with HM Revenue & Customs, on your behalf, in relation to IR35 status disputes and the related tax enquiries.