Are you or might you be subject to IR35? as contractor or employer
There are an increasingly number of people working as consultants and contractors that purport to be self employed. But are you really?
In the UK, the HMRC has a number of checks which is often used to confirm a persons employment status. These have recently been changed.
The neat graphic below, has all the questions and the likely outcome.
If you employ “freelancers” you may want to check this to see if your contractors pass this test. If they dont, and have been with your for some time YOU and your company can be liable for back tax! Not to mention back dated employee benefits!
I was recently engaged by a well known organisation, but some of the terms were likely to have led to the client being at risk of IR35, so with some negotiation the contract was changed, ensuring both parties were “clean”. Even firms with advanced HR policies are at risk of making mistakes in this area, in fact I would suggest, the more “advanced” and complex your systems, the more at risk as a business you are from this particular piece of legislation around taxation and employee status.
The bottom line – check with your accountant!