Contractors widely dissatisfied with government anti avoidance measures: Ir35 is deeply unpopular with Contractors and It is a constant source of concern and angst to contractors.
It has mainly been the concern of contractors since the rules came out.
It is law and all contractors caught by the rules should make arrangements to meet the increased financial burden.
What IS IR35 Ir35 is a piece of tax legislation that assesses contractors/freelancers based on the substance of their working arrangements.
Ir35 is a particularly unpopular, nasty and difficult tax to deal with.
It is not based upon the turnover of the company but on the amount of monies received on IR35 invoices.
It was formally introduced in April 2000.
It is legislation introduced in the 1999 Budget aimed at 'countering avoidance in the provision of personal services'.
Ir35 is the generic name given to anti avoidance legislation introduced by the Government to counter "abuse" of PSCs.
(Personal Service Companies) Ir35 is the Government legislation that was implemented to put a stop to this behavior.
It is a choice and you can choose if the legislation applies to you.
It is a concept that is essential within the contracting community and greatly affects the profession.
It is a case in point.
Ir35 has not changed.
Existing case law is still the only true route to determination.
THE Problem with IR35 is its COMPLEXITY for the Layman Contractor who does not have a LAW Degree Ir35 is tax law that relies on detailed knowledge of employment law.
It has been introduced to clamp down on what Revenue and Customs believe is bogus self-employment.
It is essentially a self assessment 'tax'.
It will continue to be an important issue for all free lancer's / contractors.
Ir35 is concerned with your relationship as an individual with the end client.
Ir35 is concerned with showing whether or not you are a disguised employee of your client.
It is complex and often contentious for a number of reasons.
It is still as much of a mess now as it was when it was introduced three years ago.
THE USUAL WAY TO AVOID IR35 the usual way to solve IR35 concerns is to have an independent company specialising in IR35 contracts, review and amend your contracts before you enter a work agreement with your client.
There are several telltale 'clauses' the HMRC revenue uses to identify and prosecute contractors, not having them present is an automatic fail,

1. such as substitution (the right to substitute another employee to provide the same service you do)
2. Mutuality of obligation waivers(there is no mutual obligation to continue providing service after contract is complete on your part NOR is the client obliged to reemploy you.
   )
3. supervision and
4. control (this should never appear in your contract, YOU are your own boss)

HOWEVER having these Clauses is NOT enough, even if you had a perfect contract, yet your actual working arrangement did not reflect that of an independent contractor and LOOKED like a disguised employee...
you would still be liable for IR35 investigations and have to pay back a load of tax monies.
Contracts will need to be checked for each job/project and they should highlight your status as a self-employed professional.
The SOLUTION: The Improved way of avoiding IR35 There is a much better way to make yourself outside of IR35, this may come as a surprise to you but IR35 exclusively aims at limited companies..
So if you do not operate a limited company and instead use a different vehicle for contracting such as a self employed trust (offshore umbrella company) you will not only be outside of IR35 but you will also enjoy the benefit of a much higher take home pay..
but there are risks, I would suggest you download our guide to choosing an offshore umbrella provider, as well as the free step by step guide to getting outside of IR35 here.