April’s IR35 legislation changes aren’t too far away, and if you’re faced with a contract that’s inside IR35 what will you do? Will you reject it, challenge it, or take it? How do you know if that’s the right decision?
In this blog we look at the different circumstances that might lead you to refuse an inside IR35 contract, and why you should always consult your decision with your contractor accountant.
Each contract is unique
Does the contract make financial and / or professional sense? For example, will the contract open doors to future clients and bigger contracts, or maybe you’re experiencing a bit of a dry spell and the contract will bring some financial relief (albeit at a reduced take home pay from what you’re used to). Taking an IR35 contract for these reasons could outweigh the negatives.
What does Taxevo advise?
Speak to a specialist contractor accountant before making your decision. Whilst it’s no longer your responsibility to determine your own IR35 status, there may be things you can do to persuade your client / end-hirer change your status.
It’s advisable to check your IR35 status yourself, by using HMRC’s CEST tool (Check Employment Status for Tax). Your accountant will also be able to review your contract and working practices, and give you their professional opinion on your status.
What happens during an IR35 review?
Your accountant will take a detailed look at your terms of employment, your contract and working practices. If these elements are more aligned to those of someone who’s employed rather than that of an independent contractor, it’s suggested that you’re working inside IR35.
There are three main areas which are considered when determining a contractor’s IR35 status:
Substitution: Would you be able to send another contractor in your place for part of your contract? If the answer is yes, then this would suggest you’re working outside IR35.
Control: How much control and supervision does the end-hirer / client have over your working practices? The less control the more likely you’ll be found outside IR35.
Mutuality of Obligation (MoO): Is there any expectation for you to complete work that’s outside the agreed scope of your contract? If the answer is ‘no’ then it would strongly suggest you’re working outside IR35.
What can Taxevo do to help?
If you find yourself inside IR35, your Taxevo accountant will be able to suggest changes you can make to your working practices or contract in order to try and change your status’ determination. They will also be able to suggest changes which you can put to your client. If your status is still found inside, your Taxevo accountant will support you in your appeal.
Alternatively if you decide to complete the contract but under an Umbrella company, Taxevo’s group company, SG Umbrella allows you to switch over for the duration of your contract at no extra charge, then when your contract has ended simply switch back to Taxevo and using your Limited Company.
No one likes to lose control, especially when it comes to the overall amount you take home from a contract. Your Taxevo accountant will be able to help you get back in the driver’s seat, and ensure all that can be done has, in order to try to turn your status determination around. If this sounds like the sort of support and expertise you need, get in touch today.