IR35 - Employment status

The only safe thing to do, if you believe your contract is outside IR35 regulations, is to seek advice from the HM Revenue & Customs under the contract referral scheme. Where an opinion is obtained that a contract falls outside IR35, this will be binding on the HM Revenue & Customs. You may wish to take legal advice on such an application and, if so, I shall be pleased to let you know the name and address of a firm specialising in contractor status matters. You can also move forward solely on the basis of independent legal advice in which case you may wish to consider obtaining insurance against the possibility of the legal opinion being challenged by HM Revenue & Customs. The law is constantly evolving through court cases, many of which involve HM Revenue & Customs. All decisions need to be taken on a per contract basis.

We will help all we can. Call us on 020 8810 4500; but you need to conduct your own research and make your own decision about IR35 status. Please refer to our recommended "Other sources".

For non IR35 income it is important, for tax planning, to retain at least 21% of profits within the company for corporation tax in addition to funds required for PAYE, VAT and other creditors. Funds surplus to immediate requirements may be placed in a company deposit account. The exact tax position and available tax planning options will be advised following preparation of the statutory accounts. The most tax efficient method of distributing profits is by dividend.

Contact us about IR35 problems, general businesses and tax advice