2. Legislation and key changes over last 15 years
2000 IR35 legislation
2007 Manager service company legislation
2012 IR35 business entity test
2014 Agency legislation, focus on Supervision, Direction, Control
2015 Agency reporting obligations begin from April 6
2015 HMRC beats Reed in £158m temps’ tax case
2016 Introduction of tax slabs on dividends and tax relief on travel and
subsistence to be abolished
3. Understanding IR35
No employee –
employer relation
IR35
Strong employee -
employer relation
Outside IR35 IR35 checklist questions Inside IR35
Yes Personal service / Right of substitution No
Contractor Control Client
High Mutuality of obligation Less
Own Provision of equipment Client
Yes Financial risk No
Irregular Basis of payment Regular
No Exclusive service Yes
No Part of organization Yes
Business like Intention of the party Casual
Yes Business like trading No
4. Agency legislation
https://www.gov.uk/government/publications/employment-intermediaries-reporting-requirements/what-the-changes-mean
See points 5 and 6
1. Focus on contractors’ employment status – whether they are truly self employed and
not under supervision, direction and control – agencies required to obtain proof
2. Introduction of RTI and reporting requirements upon agencies to divulge details of
contractors paid gross together with their employment status, eg, self employed,
limited company
3. Debt transfer risk to agencies of contractors’ unpaid tax and NI for reporting which is
inaccurate or misleading regarding employment status
4. Penalty introduced by HMRC for providing incorrect information
5. Quarterly reporting
Workers details
How he gets paid
o SE
o Partnership or LLP
o Outside UK
o Limited (PSC) or Umbrella
Assignment details
Payment details
Company details
6. Employment status manual
ESM2051
Agency and temporary workers: agency legislation – provisions from
6 April 2014: service companies (including PSCs)
Three sets of legislation need to be considered by a contractor in a set order to identify their tax
status. If the Agency legislation is not applicable, then the provisions of the MSC legislation should
be reviewed; if they are not applicable then the contractor must Look at the IR35 legislation.
(See ESM2051)
Agency legislation MSC legislation IR35 legislation
7. Solutions for agency workers
Using umbrella company
Fall outside scope but will be reported
Loss of tax relief on travel and subsistence but some tax offset expense still available
GMC revalidation/appraisal etc
Contractors operating through a Limited company
• draw salary, dividends and file year end self-assessments ensure no more directors
and shareholders in the company
• IR35 contract reviews
o if outside then can claim expenses, salary, dividends
o if inside, then deemed salary
What to look for after the Autumn Statement
8. Current HMRC consultations
• Freelancer limited company
• Intermediaries legislation (IR35)
• Simplification of tax and NI contributions
Other updates
HMRC has started using Accelerated Payment Notices (APNs) for debt recovery
