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Where Taxpayers and Advisers Meet

PAYE and IR35

tuftybucknell
Posts: 2
Joined: Wed Aug 06, 2008 3:13 pm

Postby tuftybucknell » Fri Feb 25, 2005 5:23 am

My wife & I run a small consultancy & training company. One of my existing clients wishes me to continue work for them on a more permanent basis. I have until now sent them a monthly account, however this new work means that the IR35 rule would kick in. They do not want to change the way they pay me. Can I do the PAYE, NI & tax or do they have to do it?. It could mean losing a good client if I can't.

squowse
Posts: 36
Joined: Wed Aug 06, 2008 3:15 pm

Postby squowse » Fri Feb 25, 2005 10:28 am

If you can issue invoices to more than one client then you should be well on the way to being outside IR35 I think.

They say that the whole picture counts, so make sure that you can show the five indicators of self-employment (as defined by IR35).

johnfkavanagh
Posts: 332
Joined: Wed Aug 06, 2008 3:08 pm

Postby johnfkavanagh » Fri Feb 25, 2005 5:37 pm

The number of clients you have is not of itself a relevant factor in determining whether IR35 applies. Does having two or more employments make you self-employed? Of course not. So why would having two or more clients take you out of IR35?

The fact is that it is perfectly possible for a one client company to be outside IR35 and for a multi-client firm to be within IR35 in relation to all its contracts. The only relevant issue is whether the contract between your company and your client(s) has the characteristics of employment, although that issue may be a complicated one.

Likewise, an employment contract is an employment contract whether it is temporary or permanent, and the same logic surely applies to the question of whether a contract between your company and a client is within IR35 or not. The degree of permanence of the contract is again not a determinative factor of itself.

I would urge you to do the sensible thing and get professional advice on your position from a specialist tax adviser. The personal service company provisions are widely misunderstood (or at best partially understood) and I firmly believe that a sizeable proportion of practising accountants (especially at the smaller end of the market, ironically those whose clients are most likely to be affected) are not capable of advising on them.

John Kavanagh
UK Tax Consulting Ltd
Chartered Tax Advisers
www.uktaxconsulting.co.uk
mail@uktaxconsulting.com
Tel: 020 7060 1660
Fax: 020 7060 1663
John Kavanagh CTA ATT FRSA MCSI,
Director, UK Tax Consulting Limited

http://www.uktaxconsulting.com

JSK TAXATION
Posts: 200
Joined: Wed Aug 06, 2008 2:18 pm

Postby JSK TAXATION » Sun Feb 27, 2005 3:17 am

The last contributor is correct to explain that this issue is much more complicated than the first contributor is implying.

It is important to recognise that if you had a number of clients all with different contractal arrangements, one would need to consider the nature of EACH of those contracts to decide whether each falls within the gambit of IR35.

One consolation is that the Revenue will provide a view as to whether a particular contract does or doesn't fall into the clutches of IR35, unfortunately though only when the contract is in place. One must therefore take purposeful professional advice before agreeing any contract with a client.

John King ATT
johnking@tax2002.fsnet.co.uk
John S King
Chartered Tax Adviser
e: help@taxation-advice.com
w: http://www.taxation-advice.com
01732 897850

squowse
Posts: 36
Joined: Wed Aug 06, 2008 3:15 pm

Postby squowse » Wed Mar 02, 2005 6:38 am


johnfkavanagh
Posts: 332
Joined: Wed Aug 06, 2008 3:08 pm

Postby johnfkavanagh » Thu Mar 03, 2005 1:53 pm

I am not sure what "squowse" thinks that his last contribution adds to the discussion. Incidentally, the following sentence is directly quoted from Tax Bulletin 45:

"One of the central questions in deciding whether the new rules apply to an engagement is to establish whether the worker would have been an employee of the client if engaged directly."

The fact that the words "an engagement" are used clearly imply that the rules apply to each individual client engagement, not to the totality of the service company's activities. So, as I said in my earlier contribution, the number of engagements is not directly relevant, even on the Revenue's view.

In any event, taking the Revenue's position as being gospel on contentious matters like this is a bit daft (unless, of course, it works to the advantage of the taxpayer). Their pronouncements are always, always, always - without exception - (emphasis clear enough?!)tendentious and frequently wrong. For example, they quote the case of Hall v Lorimer as if it was a case where their sweetly reasonable views were upheld in the face of unreasonable opposition by a recalcitrant taxpayer. Actually, the complete opposite is the truth.

The fact is that "categorisation" issues (and, by extension, IR35) are not apt to be dealt with by the unininformed or the uninitiated. As I said before, it is a shame that the rules are not more widely understood given their wide relevance.

John Kavanagh
UK Tax Consulting Ltd
Chartered Tax Advisers
www.uktaxconsulting.co.uk
mail@uktaxconsulting.com
Tel: 020 7060 1660
Fax: 020 7060 1663
John Kavanagh CTA ATT FRSA MCSI,
Director, UK Tax Consulting Limited

http://www.uktaxconsulting.com

FoxTopper
Posts: 2
Joined: Wed Mar 24, 2010 10:41 am

Re: PAYE and IR35

Postby FoxTopper » Mon May 24, 2010 1:33 pm

I think this article will be useful to you : http://www.freelancesupermarket.com/new ... hange.aspx

The PCG has backed the government’s plan to either conduct a full review of IR35 or abolish it completely.

johnfkavanagh
Posts: 332
Joined: Wed Aug 06, 2008 3:08 pm

Re: PAYE and IR35

Postby johnfkavanagh » Wed Oct 24, 2018 5:58 pm

I think this article will be useful to you : http://www.freelancesupermarket.com/news/2010/5/19/ir35-rules-to-change.aspx

The PCG has backed the government’s plan to either conduct a full review of IR35 or abolish it completely.
How did that go for you?
John Kavanagh CTA ATT FRSA MCSI,
Director, UK Tax Consulting Limited

http://www.uktaxconsulting.com


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