IR35 Faqs
Q How often should I have an IR35 review?
A You should have a review each time you take on a new contract or an engagement with a new client. You will probably not need a further review for a contract extension with the same client unless your working relationship with the client has changed.
Q But if my contract terms have not changed, why do I need a new review simply because I am now working for new client?
A Because HM Revenue & Customs will look at your actual working arrangements with the client when conducting an IR35 enquiry, and not simply the written contract terms. Your work for one client could be quite different from your work with another.
Q Does IR35 affect the expenses that I can claim?
A No. It only affects whether or not your company can distribute part of its profits in dividends. However, the ability to claim expenses will depend on other matters such as the 24 months rule and the Fixed Term Appointment rule.
Q How have the new rules on Managed Service Companies (MSCs) affected IR35?
A They haven’t, although if your company is regarded as an MSC your service provider will have to operate PAYE on your fee income anyway. If your company is not an MSC, then you have to carry out the same IR35 checks as previously.
Q What happens if I don’t have regular IR35 reviews?
A You may be at risk from an IR35 enquiry from H M Revenue & Customs. If you have paid yourself in dividends and you are found to be subject to IR35, you will be asked to pay back the arrears of PAYE and NIC (and interest) from the start of your company or 6 April 2000 whichever is the later. You may also be charged a penalty.
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