Beating the IR35 Challenges
The new piece of tax legislation simply known as the IR35 has brought down terror to bear on many contractors working in the United Kingdom. It has not helped that we now live in a global village thanks to the internet. This platform (the internet) has facilitated the spread of many rumors and misconceptions about the tax legislations and the IR35 challenges that have come along with that specific piece of law.
The IR35 is basically a tax law that is aimed at preventing tax avoidance that is contrary to the spirit of the tax code, especially as applies to contractors and other people who may be termed as self employed, but are in actual sense ‘disguised employees’. This does not mean that lawfully and truly self employed individuals will be disadvantaged in any way whatsoever. It is the people hiding under the guise of false self employment who will have to face the anger of the HMRC.
For people who are gainfully self employed and are not using any form of falsehood to claim tax breaks, it might still be a little difficult to make the HMRC see the truth. Contractors who do not present a professional image of their company may also find themselves under the glare of the IR35, leading to stiff penalties that might crush the entire business. To see if being self employed can help you save money, try out the contractor pay calculator to see how much tax you can save over being fully employed.
Instead of running away from these IR35 challenges , there are a number of things that contractors can do to ensure that they are way above board and fully compliant with the conditions set out by the IR35.
Setting up a professional image of the company is the very first thing that should be done. Getting business insurance and having an official residence for your company (that is not your home) are some of the first things that can be done with a lot of ease. They are also actions that can greatly increase the credibility of your organization and prevent the harsh gaze of the IR35 from falling on you.
There are some contractors and other self employed individuals who are of the belief that complying with the IR35 legislation is a waste of time and money. It is their view that the IR35 tax legislation is just a political gimmick that will soon collapse with the passage. That is a very dangerous opinion, seeing that the HMRC has very harsh penalties that are imposed without mercy on those found to be avoiding tax in a manner that is clearly against the spirit of the tax code.
It is an undeniable fact that each and every person should use the law to their benefit in such a way as to reduce the amount of tax that they would have to pay. However, any attempt that can be interpreted as an attempt to bend the rules will be quickly spotted and dealt with by the HMRC.
The best thing for self employed individuals throughout the country is to ensure that they are fully compliant with the demands of the IR35 legislation, thus avoiding any and all IR35 challenges that might come their way.
The new piece of tax legislation simply known as the IR35 has brought down terror to bear on many contractors working in the United Kingdom. It has not helped that we now live in a global village thanks to the internet. This platform (the internet) has facilitated the spread of many rumors and misconceptions about the tax legislations and the IR35 challenges that have come along with that specific piece of law.
The IR35 is basically a tax law that is aimed at preventing tax avoidance that is contrary to the spirit of the tax code, especially as applies to contractors and other people who may be termed as self employed, but are in actual sense ‘disguised employees’. This does not mean that lawfully and truly self employed individuals will be disadvantaged in any way whatsoever. It is the people hiding under the guise of false self employment who will have to face the anger of the HMRC.
For people who are gainfully self employed and are not using any form of falsehood to claim tax breaks, it might still be a little difficult to make the HMRC see the truth. Contractors who do not present a professional image of their company may also find themselves under the glare of the IR35, leading to stiff penalties that might crush the entire business. To see if being self employed can help you save money, try out the contractor pay calculator to see how much tax you can save over being fully employed.
Instead of running away from these IR35 challenges , there are a number of things that contractors can do to ensure that they are way above board and fully compliant with the conditions set out by the IR35.
Setting up a professional image of the company is the very first thing that should be done. Getting business insurance and having an official residence for your company (that is not your home) are some of the first things that can be done with a lot of ease. They are also actions that can greatly increase the credibility of your organization and prevent the harsh gaze of the IR35 from falling on you.
There are some contractors and other self employed individuals who are of the belief that complying with the IR35 legislation is a waste of time and money. It is their view that the IR35 tax legislation is just a political gimmick that will soon collapse with the passage. That is a very dangerous opinion, seeing that the HMRC has very harsh penalties that are imposed without mercy on those found to be avoiding tax in a manner that is clearly against the spirit of the tax code.
It is an undeniable fact that each and every person should use the law to their benefit in such a way as to reduce the amount of tax that they would have to pay. However, any attempt that can be interpreted as an attempt to bend the rules will be quickly spotted and dealt with by the HMRC.
The best thing for self employed individuals throughout the country is to ensure that they are fully compliant with the demands of the IR35 legislation, thus avoiding any and all IR35 challenges that might come their way.