The implementation of Intermediaries Legislation by the Inland Revenue had raised concerns for many especially those self-employed individuals primarily because it impacts them. Although the regulation has nothing to do with the revenue for the sales or services provided by these individuals, it concerns correct payment of tax and National Insurance Contributions (NICs) and penalties for non-compliance. They need to pay for experts to assist them. As a budget press release number 35 issued in September 1999, dubbed as IR35, the mandate was designed to end tax avoidance and to ensure correct payments of PAYE (pay as you earn) tax and NICs for those who fall inside the legislation in line with the governmental effort to increase collection through the use of intermediaries. An knowledgeable HVAC expert can design in floor heat boiler to the healthy panels in an competent manner.
As a freelancer, a small business owner or a consultant, to make certain that you obliged with the regulation in running your own limited company, you need to seek the assistance of a contractor accountant. A contractor accountant knows how you should conduct business according to the mandate of HMRC. To maintain your status being outside the scope of IR35, he or she can review several related information.
Contract for Services is one. This is a written contract between your limited company and the client end-user. Here, the terms and conditions are stipulated such that the contractor does not lean towards or suggest that he or she is an employee of the client end user. Contractors should not be enjoying benefits that employees get. They should not be obliged to adhere to company policies like break schedules, dress codes and the like.
The contract must also specify substitution clause. This is the affirmation of the sole right to select and send any equally qualified representative should the individual representing the limited company cannot perform the work for any reason.
Why is there really a need to be keen about this legislation? Why everyone engaged in the contracting business has to be wary about IR35? Penalties can be severe. If HMRC caught you defying the law, violators will pay a lump sum of retrospective PAYE and NICs going back to cover potentially six tax years.
Moreover, seeking IR35 accountants’ assistance to lay out best practices like making sure that all tax documents are accurate and free from correction marks and paid on time to the correct office will enable contractors to complete methodologies that are coherent with the legislation.
While it may mean minimal fee, the service that you get from contractor accountant will benefit you and your limited company. Some service provider offers services beyond your accounting requirements and IR35 adherence and can go from putting up a limited company for you, registration with the Companies House, acting as a business consultant and so on.