IR35, Test Your Employment Status
Are you ready for April 6th? IR35 Regulations are finally taking effect from 6th April. The regulations have been introduced to avoid tax avoidance in the contractor’s market, and medium-large businesses are now responsible for deciding contractor’s employment status, however as a contractor you can raise a dispute against the decision.
Whilst an incredibly complex set of regulations, determining your ‘employment status’ can be relatively simple.
If you are running a HMRC IR35 test to determine your status, there are several factors that will be taken into consideration.
1.How are you paid?
To stay outside of IR35 a self-employed contractor should be paid on a project basis with a clear start and finish date.
2.Do you run your own business?
Running your own business shows that you are charging clients on a self-employed contractor basis and not providing services as an employee. Having your one website, marketing collateral and office space helps to highlight you as a business entity. Equally if your contractors dictate your hours and are heavily involved in guiding you and telling you processes of how work should be completed you are more likely to be considered an employee.
3.Whose equipment do you use?
HMRC will use this information to help determine your employment status, if you r contractor is providing you with all your working tools, e.g computers, phones, printers, machinery etc you are more likely to be deemed as an employee.
4.Do you have direct reports?
If you become an integral part of a client’s business structure and have employees from that business reporting into you will likely be deemed as an employee.
5.Are you Exclusive?
If your working for multiple clients you are clearly a self employed contractor, however if you work exclusively for a client for an extended period of time then HMRC may view this as an employee relationship and not a contractor relationship.
Take the full test at HMRC to see what employment status you hold. Check employment status for tax - GOV.UK (www.gov.uk)