IR35 / Umbrella Company / Contractor

[Dave-A]

Hi,

Are there any experts out there who can assist with a couple of general questions on IR35? We are paying an Employment Agency (EA) for contractors who are billing the EA through Umbrella Companies (UC).

1 Is it vital that the contractors are paid by their UC-s as wages, under PAYE?

2 Is the EA under obligation to check this?

3 Are we exposed in any way - ie can any lost tax/nic debt be transferred across to us, or does the EA carry this risk?

4 What happens if the work done for us is done in such as way that relationship between us and the contractor is deemed to be inside IR35 - does the existence of a properly run UC, paying out all of it's monies as wages, mean that IR35 compliance isn't important, like for any agency temp?

Many thanks if you know the answers!

Dave-A

[Loza]

It is vital that the UC pays genuine employment income, if not they are caught by the anti avoidance provisions of FA 2007 relating to MSC,s in effect any dividend payments are treated as employment income and the tax can be recovered from "others", principally the director of the MSC or the person providing the company and management services.
If IR 35 were deemed to apply it would apply to the relationship between the agency and the contractor, if a liability arises it would fall on the agency if the person was not incorporated, otherwise it would fall on his/her service company.
I cannot see any liability arising to yourselves.
You can research this further on www.hmrc.gov.uk/employment-status/msc-guidance.htm

[Dave-A]

Thank You Loza,

Can I clirify one point - the anti-avoidance rules refer to MSCs, but Umbrellas and Personal Service Companies are slightly different. Can I assume that the anti-avoidance rules apply to all types?

Regards,

David

[kevinukms]

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