IR35 Contractor Test

HMRC is keen for to make sure that your business is bona fide and not disguising an alternative scenario. IR35 is the legislation that prevents someone, who if engaged directly by their end client would ordinarily be an employee, from trading through an intermediary (limited company or partnership) to pay less Tax and National Insurance. It is worthwhile spending some time making sure you are compliant, if you don’t the unpaid tax, fines and penalties could prove a nasty shock sometime in the future.

HMRC have published a risk based approach to help you assess whether your business entity is IR35 compliant. The 47 page document contains 12 questions and examples of typical backup evidence, along with 6 example scenarios to illustrate when and why IR35 may apply to an engagement.