Inland Revenue illustration of IR35
PROPOSED NEW RULES ON THE PROVISION OF PERSONAL SERVICES
ADDRESSING SOME CONCERNS
Responses to Budget Day press release IR35 have raised a number of concerns. Some of these will be pursued in dialogue with representative bodies. However, at this stage it seems worth offering reassurance by correcting a number of common misconceptions:
the new rules will not prevent individuals from setting up companies (service companies) through which they provide their own services - fears that we may be seeking to emulate other countries in this respect are entirely unfounded;
the new rules will not prevent agency working;
the new rules will not prevent workers and clients from arranging engagements through service companies, agencies or similar intermediaries;
there is no suggestion that contracts covering a period in excess of a certain duration should be treated as employment;
engagements entered into by workers will be subject to the same rules regardless of the size of the organisation hiring or supplying those workers.
The most important point to keep in mind is that the purpose of the proposed new rules is to remove the scope for avoidance of tax and national insurance through the use of intermediaries. The vast majority of businesses do not avoid tax and national insurance in this way and so will not be caught by the new rules.