you an IT, Engineering or Computer contractor operating through
your own personal service company?
you are, you could well be caught by the IR35 regulations. IR35
is a Government measure to prevent tax avoidance in the provision
of personal services.
IR35 legislation was set up to catch an employee who leaves employment
on a Friday and returns to work on the Monday as an independent
consultant through a Personal Services Company. The Government
and the Inland Revenue believe that if you are paid hourly/daily
and attend your client's site to do your work then you are in
fact a "disguised employee" of the client and not a
"real business" or even a "self-employed"
consultant/contractor. The legislation is an attempt to force
all contractors who work for one client at a time to pay tax as
if they were employees of the client. To learn about IR35 in general,
we recommend the website
of The Professional Contractors Group.
of the ways to avoid getting caught in the IR35 trap is to set
up an offshore company registered in a tax haven where little
or no tax is payable. Your client pays your invoices gross and
can offset your invoices against their corporation tax as a supplier.
pay your moneys into your offshore company's bank account and
you can decide how much you bring into the UK for tax and NIC
purposes but the balance you can leave in your offshore company
which does not attract any UK income or corporation tax. In this
way, you can avoid the IR35 regulations to your benefit as well
as to the benefit of your employing client. Read about how we've
helped with IR35 here.
if you want to avoid the IR35 trap, contact
us to learn more.