If there is one subject that makes any experienced contractor’s blood boil, it may well be IR35. Indeed, it has been the cause of considerable consternation among contractors for more than a decade now, with the Professional Contractors Group (PCG) having been formed in response to it. So, what has IR35 done to give rise to such ire over the years, and why might you appreciate the services of the IR35 accountants here at Freelancer Accounting (http://www.freelanceraccounting.com)? 

Well, first of all, we need to properly establish what IR35 is. Termed ‘The Intermediaries Legislation’ in 2000, IR35 was announced in 1999 with the aim of stopping people working through their own personal service company whilst performing work as if they were an employee, all so that they could allegedly avoid tax. The target was individuals who set up as a contractor and worked through a Limited Company, and who could therefore, until that moment, be taxed as if they were self-employed – despite the work itself barely distinguishing them from an employee. 

An example cited by HMRC is of an IT specialist leaving his permanent job one Friday before returning the following Monday as an IT contractor working through his own limited company. Despite doing exactly the same work as previously, he is only paying himself a small salary – on which tax and NIC is payable – with dividends providing most of his income, meaning that he pays less tax and national insurance. In reality, however, the legislation has been condemned by PCG on account of its “unfairness and complexity”, which highlights the necessity of accountants for contractors to advise on matters relating to IR35.  

IR35 is seemingly clear in that it applies to those who carry out work through “intermediaries” to an end user under circumstances in which, if there was a direct contract between the contractor and the end user, it would be one of employment. However, the legislation is also so complex that contractors frequently struggle to correctly assess whether or not they fall within it, with their status possibly being dictated by contracts that they have never seen. That is unfortunate, not least given that those contractors who are outside IR35 pay considerably less tax than those inside it.

It’s obvious, then, that for contractors, it pays to find specialist accountancy services that can advise them on their IR35 status and make it easier for commercial relationships with clients to be constructed that are outside IR35. Although numerous cases have arisen that have made IR35 a little easier to understand, it remains the bane of many a contractor’s existence. Plus, with so many myths still flying around about IR35, it’s never been more important to have a PCG accountant by your side to ensure that you avoid the remaining pitfalls. 

Visit http://www.freelanceraccounting.com now to find out more about the affordable services of our well-qualified and experienced accountants in London. 

Editor’s Note: Freelancer Accounting (http://www.freelanceraccounting.com) is represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Please direct all press queries to Louise Byrne. Email: louise@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.