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If your carefree freelance lifestyle has settled down to a cosy monogamous relationship with just one steady client, you might find it really is a properly bad time all round.
If you’ve never heard of IR35, don’t be too hard on yourself. Most of the sentient world has never heard of the obscure code by which such documents are raised. Press release “Inland Revenue number 35” - hence the “IR35” designation - should give you some clue as to the age of this enduring little piece of legislation.
It may be a bit of a mystery, but it’s been a part of our lives since 2000 - that’s back when Alex Salmond resigned the leadership of the SNP for the first time, and before anyone had a Facebook account. Now, the First Minister has come and gone - and come and gone - and Facebook has become the ubiquitous social network. IR35 is still with us.
You set up on your own as a freelancer for all that variety, or because you like working on your own. Either way, things have worked out, so that you now find you’re walking through the same office door almost every day. If your client base has become just a single client, the tax man could well say you’re not out there on your own after all, and put paid to your tax status.
The plan behind the legislation was of course to catch out those people who claim to be self-employed to put them in a better tax position when, all along, they’re acting just like an employee.
HMRC asks a series of questions to freelancers and intermediaries who work independently to decide whether you’re a freelancer or an employee – it is all down to how you answer these and, if your number is up, you’ll be in line for a review of your status and a bigger tax bill to boot.
If the dreaded compliance letter drops through your letterbox, you’ll need to know how you’re going to score. That’s where we can help, with a heads-up on some of the key questions which will be asked.
Needless to say, if your answers raise a flag or two, you’ll probably want to talk to a friendly face. We can’t promise to get you off the hook, but we’ll do our best to help.