If you are a freelance worker you will no doubt be used to the plethora of rules and regulations which govern the way you work and report your earnings. However, have you ever considered whether HMRC might consider you to be a ‘disguised employee’?
IR35 regulation is part of the Finance Act 2000 but not everyone is fully aware of what it means and how it might apply to them.
Here are four great YouTube videos which will help explain the rather less than straight forward concept.
1) Starting from the beginning?
This video may look rather dubious initially as the individual is dressed rather informally in a T-shirt. However, he goes on to explain that it’s casual dress day in the office…the thought of filming the clip at another time obviously didn’t occur to him!
If you ignore the casual attire, this clip is full of excellent information and explains the basics of IR35, what it is and very importantly how to ensure that this piece of legislation doesn’t end up applying to your business. A very useful introduction to those who may not have heard of IR35 before.
2) Worried it might apply?
A clear and factual presentation from a firm of accountants, this series of slides helps individuals to understand the criteria which is almost universally accepted to determine whether IR35 should apply. Test cases in court have resulted in three criteria all of which must be present in order for HMRC to be able to treat you as if you were employed.
Understanding what types of employment conditions HMRC take into account and how the taxman might view the way in which you work could be critical to ensuring you don’t fall foul of IR35 legislation.
3) Dragonfly: a cautionary tale
To highlight the complexity of the IR35 rules and how they can be applied, this short presentation tells the story of one of the most high profile recent cases to be caught out by the legislation.
In this example, the contract was set out in order to comply with IR35 rules and that was certainly the intention of both parties. However, the end result was that the individual was slapped with a retrospective tax bill for £99,000. Keen to avoid the same outcome? Watch the video and discover what went wrong….
4) Staying on the right side of IR35
In this presentation which lasts for nearly 10 minutes, an expert from accountancy firm Brookson provides advice on IR35 legislation and the pitfalls to look out for.
The clip goes on to explain the differences in employment status and how to ensure you remain compliant with the all-important IR35 rules. Also included are some key facts about how to create a contract which adequately shows that your business could not be classed as ‘disguised employment’ and that you are legally outside the PAYE system.
HMRC rules are renowned for being complex but IR35 is particularly important to get right. If you fail to take sufficient actions to protect your employment status, you could end up facing a huge tax bill often several years down the line, making it even more difficult to prove your case. Click here to visit an Accountant’s site offering IR35 advice.
If you aren’t sure whether you have adequate controls in place, getting advice from an accountancy firm will help you identify whether you are at risk, and if so, what you could do to ensure you don’t get trapped by the rules.