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Umbrella company IR35
What Is IR35?
April 2021, the month that so many companies dreaded and for the first time in a year, it wasn’t because of Covid-19, it was the worry, the thought of being non compliant, April marked the new Intermediaries Legislation coming into effect. The act is known as the IR35 named after Inland Revenue, who are now of course known as HMRC.
The main aim of the legislation is to change the way in which business is dealt with. Medium and large sized businesses now have the legal obligation to determine the employment status of individuals that provide services to them. With great power comes great responsibility, once up to the individual person, the responsibility falls on the company.
Would you be compliant if there was a check today?
Umbrella Companies : Helping Your Company Comply With The Law
The legal obligation is taken very seriously, with life changing, potentially bankrupting fines for those found not complying with the law. Corruda’s liability calculator shows you the amount that you company could potentially be liable for, and if that figure strikes fear into you, then Corruda have a solution to help to ensure that you make a quick turn around into a compliant company.
The relationship between your company and any individual can be determined by HMRC to be not self employed, giving them the rights to backdate 6 years of PAYE and NICs.
The wording of contracts, and making sure that one is not a disguised employee is the overall aim of the legislation and tax benefits of limited companies are on the line should you get caught by HMRC.
How Will Your Status Be Determined?
HMRC reserves the right to conduct checks at any time of their choosing. The written contract is essential disregarded and HMRC instead look to consider the relationship of the contractor and the business – a ‘notional contract’
The following three factors are considered:
- Control. The level of power that the business has over how, what, when and where the contractor completes the assignment is assessed. More control = likely to be inside IR35.
- Substitution. Can the work be completed by someone else or is it person-specific or contractor specific? The latter means that it is likely operating inside IR35.
- Mutuality of obligation. Is there an obligation for the business to provide work? Is there an obligation for the contractor to accept the work? This would be seen to be operating inside IR35.
Work – Tax – Pay – Under The One Umbrella.
Umbrella Company IR35 : Contractors Aid
If you work through an umbrella company, you will be taxed as an employee. Paying employee income tax and employee National Insurance Contributions on the amount you are paid.
With minimal paperwork, more often than not IR35 caught workers prefer to use an umbrella company. Umbrella Company IR35 is the quick and easy way to ensure that you are compliant, with minimal paperwork, take home pay each week and help whenever you need it.
Impact On The Recruitment Industry : The Crackdown On The Contractor
With a huge rise in workload for hiring managers, companies are finding themselves needing to find new ways to attract contractors as the ‘pool’ of applicants has diminished. With the crackdown on IR35, many contractors are starting to look for permanent jobs, there are still many changes to come as this continues to roll out. If you are unsure about your status and whether you are compliant, then get in touch today with Corruda and get everything in order, without the stress.
Can you afford the fine if HMRC decides your self-employed operatives are non-compliant?
Run your numbers through our liability calculator and see how big a risk you are taking, the give us a call or fill in a request and we will get back to you.