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What is IR35?

‘IR35’ is legislation that HM Revenue and Customs (HMRC) uses to establish whether a contractor is truly self-employed, or claiming self-employment status, and therefore, avoiding tax.

HMRC considers that self-employed person should be able to prove the following:

Choose When, How and Where They Work

When is a self-employment not self-employment?

Someone who has fixed hours, requires authorisation for annual leave and can’t be replaced by an alternative.

In other words, much more like an employee – this is known as a “Disguised Employee”.

Should the tax authorities investigate and rule that a contractor is really a “Disguised Employee”, it is very likely that HMRC will demand all the ‘unpaid’ back tax and potentially levy a penalty of up to 100% of your tax bill.

Contractors and accountants agree that IR35 needs to be reformed, whilst successive governments have discussed simplifying IR35 legislation, none has yet delivered it.

After many months of consultation with stakeholders new rules will apply from April 2017, Prosperity Pay is here to guide you through the IR35 rules and help you obtain a contract that is IR35 proof.