Contractors 'must check IR35 status
Posted on 12 January 2009
Umbrella company contractors must ensure that their contracts and working practices prove they qualify for IR35 tax exemption, it has been claimed.
According to Contract Eye, it is necessary to prove self-employment within the definition provided by Her Majesty's Revenue and Customs –essentially that contractors are not direct employees of their clients.
The site explains that IR35 rules are applied to individual contracts rather than to the person performing them, meaning that in any one year, a contractor may undertake some placements which are exempt and others that are not.
Contract Eye adds that the "most important thing" contractors can do is to have their contracts reviewed by IR35 experts, given the "considerable" financial costs of falling under the scope of the rules.
It is proposed that factors such as substitution, control and the mutuality of obligation are particularly relevant to IR35 cases, as is legal precedent established in the courts.
Web resource site Shout 99 recently described 2008 as a "highly eventful" year for the contracting sector, one which saw a number of major cases come before the judiciary.
The site claimed that legal uncertainty was caused by the decision to hold Dragonfly Consulting co-owner Jon Bessell liable for a £99,000 tax bill.
Categories: PAYE Umbrella Company News
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