IR35 Employment Status

If you are a limited company contractor, it is important that you have considered the possibility that your company may be subject to IR35 legislation.

The employment status test is made up of three main fundamental tests:

Personal service/right of substitution – as a business you should not be obliged to provide your services personally, and you should be able to provide a substitute worker to carry out the same services.

Control you as the service provider should have control over your methods of work, you should not be under instruction from the end client.

Mutuality of obligation – as a contracted business, there should not be any expectation of further work provided by the end client.

it-contractor-job-prospectsThe best defence if faced with an HMRC enquiry is a good contract which has been professionally reviewed with regard to IR35 legislation and should include a clear start and end date so as to avoid the assumption of continuation of contract and a right of substitution clause.

Your contract must not only be IR35 compliant but should accurately reflect the true relationship between contractor and end client.  An agreement letter attached to the contract signed by both parties is the best way to prove this.

 

Corrine

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