Should I get my contract reviewed for IR35 compliance?
We're taking another look at IR35 on the Kingsbridge Contractor Insurance blog today. This week - should you get your contract reviewed for IR35 compliance?
IR35 is the legislation on everyone's lips and it's a subject that we have covered a number of times. Since its passing into law in 2000, it's been a priority for freelancers and contractors to make sure they don't get caught in the IR35 net.
Some professional organisations now offer independent reviews of your contracts that check for IR35 compliance, giving you the peace of mind from the outset that you are not at risk of being caught out. This week, we're going to investigate if these contract reviews are really worth it for independent professionals today.
IR35 the risks
IR35 is aimed at uncovering disguised employment'. This affects people that provide their services through a limited company, known as a personal services company. Disguised employment' is when a contractor works on a contract through their limited company, but their working conditions and their contract indicates that they are working in the same way as a traditional employee.
If one of your contracts is caught by IR35 legislation i.e. your work appears to be more like that of a traditional employee your income will then become subject to normal income tax and National Insurance contributions and you will lose the advantage of the low salary, high dividends tax arrangement that many contractors benefit from.
If you are selected by HMRC to undergo an IR35 compliance investigation they will investigate both your contract and your working arrangements. That means that the way you work and the language of the contract you are working under need to be in agreement.
This is where the skills of a professional contract assessor really come to the rescue for a busy freelancer. Employment status experts will investigate the terms of your contract as well as delving into your working practices through the eyes of an HMRC investigator. That means that you have an objective onlooker examining your compliance for IR35 without you having to get bogged down in the finer details of this often very hard to understand legislation.
This way, you can be secure that both the wording of your contract, and the way in which you actually complete the work in the contract, are compliant with IR35, limiting your exposure to the risks of having an unexamined contract.
This, to us, is the biggest advantage of having an employment status professional review your contract and the way in which your services are delivered. It's sure to give you peace of mind that a professional can help you prove to HMRC that you've taken reasonable steps to IR35-proof your contract.
At Kingsbridge we have designed our core insurance package to cover the risks you're exposed to as a contractor. This includes Professional Indemnity, Public Liability and Employers' Liability cover, all at levels that suit the needs of the modern contractor.
If you wish to discuss your cover requirements then simply call our friendly, professional team at Kingsbridge on 01242 808740 and we will be happy to discuss your needs with you. Or you can visit our website and apply online to get access to cover almost instantly.