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IR35 - What's It All About?

Recruitment tax done correctly

Put simply, the Intermediaries Legislation (now known as IR35) relates to the tax rules put forward by the Inland Revenue (now ‘Her Majesty’s Revenue & Customs’ “HMRC”) to restrict freelance contractors from gaining tax advantages by claiming to be self-employed when they are not.

The Intermediaries Legislation was introduced on 6th April 2000; it was first proposed by the Chancellor in the 1999 Budget and details were given in the Budget press release which was called IR35.

Following consultation, revised proposals were announced in a new press release dated 23 September 1999, the legislation caused such a stir in that it changed the face of freelance contracting in the UK and it is now commonly referred to as ‘IR35’.

In HMRC’s own words; ‘The aim of the legislation is to eliminate the avoidance of Tax and National Insurance Contributions (NICs) through the use of intermediaries, such as Personal Service Companies or partnerships, in circumstances where an individual worker would otherwise – for tax purposes, be regarded as an employee of the client; and for NICs purposes, be regarded as employed in employed earner’s employment by the client.'

This means that if you are working through a company as a contractor rather than as a direct employee of a client company and you are providing your services directly to that client company, then the IR35 rules have to be considered prior to deciding how you are paid, i.e. as an employee subject to full employed levels of PAYE and National Insurance (“NI”) – if the way you provide your services indicates that you fall within the IR35 rules; or as a self–employed sole trader or a limited company director and shareholder which allows for you to pay beneficial levels of tax and National Insurance.

The rules surrounding IR35 are complex, however, it is very important that they are fully considered, and the appropriate pay method is applied to your earnings, as all self-employed workers and limited company directors are required to submit a tax return to HMRC.

This means that HMRC are fully aware of the working status you are claiming and are able to conduct investigations into your status. If they are not convinced that you are truly in business on your own account, they have the power to make you pay the full amount of underpaid tax and charge additional penalties.

It is imperative that you take your approach to your employment status seriously. Recent case law includes the recent Dragonfly case which considered whether Jon Bessell, the director and owner of Dragonfly Limited, was a disguised employee of his client’s business for certain assignments he worked on and therefore working within IR35. The Judge in the High Court found that he was, which resulted in a £99,000 bill for unpaid tax.


Modern Day Anti-Slavery Policy

The company are committed to promoting and maintaining the highest level of ethical standards in relation to all business activities. Its reputation for maintaining lawful business practices is of paramount importance and this Policy is designed to preserve these values and prevent against Modern Slavery, which encompasses slavery, servitude, human trafficking and forced labour

This statement is made under our legal and regulatory obligations pursuant to section 54(1) of the UK’s Modern Slavery Act 2015 (the Act) and sets out the steps we have and continue to take to ensure that modern slavery or human trafficking is not taking place within our business or supply chain.The company are proud of the group wide conditions under which employees, temporary workers and contractors are engaged. Given the nature of our business, our Board and Senior Management teams each consider that there is minimal risk (approximating to no risk) that, either within the Group or across our limited supply chains which support our business activities, we are in any way involved in or even tangentially supportive of, or complicit in slavery and human trafficking.The employment and procurement practices operated by the businesses within the Group ensure that the companies within our Group are rightly viewed as excellent and supportive employers.To this extent, our Group companies operate as purchasers of goods and/or services, and therefore we expect a high level of ethical conduct from those businesses with which we conduct business.

Ruksanna Malik
CEO
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Anti-Slavery Policy Statement:

The Company has a zero tolerance policy towards any form of slavery and human trafficking and is committed to acting ethically, fairly and with integrity and transparency in all business dealings and relationships, and implementing effective systems and controls to safeguard against any form of slavery or human trafficking from taking place within our organisation or that of our supply chain.

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Training

Our policy and processes for the prevention of slavery and human trafficking will be communicated to all employees, temporary workers and contractors to ensure a high level of understanding of the risks of modern slavery and human trafficking, and will further form part of the company’s training and supporting materials.

TESTIMONIALS

Hi Ruksana, Your service and care of my business has been so good over the years - I responded to the reference request immediately they sent it to me yesterday. Good luck with accreditation.

val  |  BUSINESS OWNER
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