Things to Consider When Receiving an IR35 Notice
Independent contractors have been growing in popularity with them receiving their fair share of the spotlight over the years. Several companies in the present are leaning towards hiring independent contractors because of the huge amount of time and resources they can save with their acquisition when compared to the hiring of traditional employees. Furthermore, independent contractors are perfect for emergency assignments as you can get in touch with them and have them work for you as soon as possible. With that being said, there are a number of factors that can make it troublesome for companies to hire them particularly, with regards to contractors under IR35.
What IR35 Does to Your Business
Receiving an IR35 notice does not necessarily result to you going to jail. Contractors who are inside IR35 are considered tax avoidance instead of tax evasion, with the later resulting to legal actions. As such, there is no need to panic just yet since this can be resolved with the right planning and preparation. Regardless, being labeled as contractors under IR35 will often result to 30% from up to 70% of penalty for unpaid tax. There are also IR35 calculators that are available over the internet which can help give individuals to some extent, an overview on how much they will be paying for when they are under IR35.
Things to Prepare
It should be noted that several independent contractors were able to find success in getting outside the IR35. Many find it best to resolve the tax issue in a timely and orderly manner. They were able to do so by taking the necessary measures of maintaining their correct records and updating their regularly, as well as make sure to deal with tax returns as soon as possible while at the same time being accurate about them. For good measure, be sure to save all the records for future reference which you can easily retrieve on a whim.
You can also do quick self-assessment test to help determine if your contract is under IR35. For instance, you may want to reflect and ask questions such as, how much control does the business have with their contractors in assigning what, how, when and where the assignment should be completed. A general rule to this is that the contractor increases the likelihood of them being inside IR35 when the business has more control over them.
Aside from control, you may also want to review the matters your employers take when you are not available for the job and not person specific. Having a substitution to complete the assignment will definitely go a long way in helping keep the attention of the HMRC out of you. If you are still not sure if you are under the IR35, don’t feel disappointed since you can get the get your contract reviewed by a professional and they will share you what they think. Having the backings of a professional does indeed instill confidence especially with the knowledge and experience that they have accumulated over the years.