Employment Status and Personal Service Companies (IR35)
Big news for “workers” in Personal Service Companies. A valid employment status could be yours – one day.
But is this what you really want? A lot of people like to be self-employed after all.
The reality is, in the eyes of the tax man – you can’t be self-employed and work exclusively for one business doing the same thing, on their terms, particularly when this continues year after year. That goes against the very definition that HMRC are looking to uphold.
What are workers?
For more information on “workers” please read my article:
http://www.darrallandcompany.com/employment-status-umbrella-companies
Why should I be worried? Everyone I know is doing it
HMRC have been working very hard behind the scenes to get a case where they can make their point stick and it looks like they have finally achieved it.
In this article We learn that Ex-BBC Look North presenter Christa Ackroyd is now facing a tax bill of £420k covering tax years: 2006/07 to 2012/13.
http://www.bbc.co.uk/news/uk-england-43074584
She co-presented the BBC’s Look North programme and was engaged through her personal service company, Christa Ackroyd Media Ltd, on a 7 year contract and within this she was to provide her services up to 225 days per year.
The 24 month rule. I’ve heard that I’m okay if my personal service doesn’t go beyond 24 months. Am I safe?
This rule could help your argument if you are definitely self-employed, although it generally is used to validate your expenses claims if you are definitely self-employed and on a contract of less than 24 months.
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim32080
Am I definitely self-employed?
There are 3 possible answers. Yes, no and maybe. Unless you’re a categorical yes, then there’s every chance that the answer is no.
The way to approach this is actually fairly simple. Just compare yourself to someone doing the same role who is definitely employed.
HMRC do offer a tool to check this and it is definitely worthwhile answering the questions to see what it says. Any answer provided by the tool is consider to be a guide, not a determination.
https://www.gov.uk/guidance/check-employment-status-for-tax
Get help. Talk to a professional:
It is always worth getting a professional opinion and we can guide you through the key elements. From there we can decide whether to escalate your case or leave you to carry on doing what you’re doing.
Please get in touch: