Mar 7, 2020 Author: Accounts Junction
IR35 FOR UNITED KINGDOM
IR35 is basically a tax regulation that was designed to make contract workers to pay the tax, who provides their services through middle-man. IR35 was implemented in 1999. This act was made to protect tax invasion and National Insurance Contribution (NICS) by organisations who hire their employees on contract basis through the way of intermediary. They do so to avail the benefits of not hiring regular employees. This will help these organisations to save amount that has to be paid as NICS. Also, they are not liable to provide employment benefits.
IR35, with its true intention, was formed to save the rights of workers and tax.
Keeping Work Practices Inside Of IR35
If you are a business in United Kingdom, you need to perform your operations under the territory of IR35 guidelines. If failed to do so, ‘Her Majesty’s Revenue and Customs’ (HMRC) may demand income tax, along with NICS, penalties and interest, that may turn up into six figured amount. You may clearly not want that! In order to keep your business operations under IR35, follow the given:
1) Proper Employment Contract: Provide your employee with proper employment contract, stating all the rights and benefits, the tenure of employment and the pay they will be getting periodically.
2) Clear Status From Intermediary: You should be clear in terms with the intermediary from whom you are hiring the contractors for providing service.
3) Tax Payment: Your business should always timely pay all the due taxes and file tax return in order to prevent your business coming on the radar of the HMRC.
