IR35 For Dummies

[@desidesigning]

I used to he on 1000 pounds per day. IR 35 completely destroyed my livelihood. Now I drive 🚗 taxis taking drunkard home over the weekend. Thank you HMRC

[@simonross77]

Great video. I called these people and they were very helpful and extremely friendly. Thanks again

[@debaccountants]

Hi Simon - very nice of you to say

[@jamess3474]

This is the most confusing ridiculous system I've ever heard of. Either you work for yourself or you don't. If you are placed by an employment agency then you work for them to the end user. if you work for yourself you are taking a higher risk and lower job security. Tax rate should be much lower. If they tried this crap in the US there would be an uprising.

[@debaccountants]

My sympathies are very much with you. There is nothing that is fair in the world of tax. One way or another it is the same - the objective is to take money off you. Such is the world I am afraid.

[@simonekiernan]

Great video. I work in the IT industry and have been looking for contract positions in the UK. When they advertise inside IR35, does this mean you must use a limited company? When they say outside IR35, does this mean you are self employed? I'm based in Ireland and I have only just come across IR35 and trying to get my head around it. Thanks in advance 🙂

[@debaccountants]

IR35 is only a concern if you are operating through a limited company. There is no such thing as IR35 if you are simply self employed. Potential employers will resist having you work for them on a self employed basis as this shifts all 4he risk on to them rather than you. A contract that claims to be outside IR35 is only of use where the terms that are included in fit the reality of what happens in contract. If you are offered such a contract they definitely want you to work using your own company, and not be self employed, and any potential downside if they get it wrong falls on you, not them.

[@simonekiernan]

@@debaccountants OK I see. Thanks so much for your reply.

[@debaccountants]

@@simonekiernan I forgot to mention that wha II said only apples to cases where your end user is a "Small" Company. For medium and large companies, since April 2021 the responsibility for applying IR35 rests with them. Thus if they do not apply IR35 then the risk falls upon them and not you. Thus you are only at risk if you work for a small company and do not apply IR35 in circumstances where you should.

[@timtim9o5]

@@debaccountants So can I take from this: I should work INSIDE IR35 if I am self employed, and taking a contract role if I want to avoid incurring substantial costs?

[@christopherrome4475]

HELL MET MAN - Protesting against the UK's IR35 Regulations - KZbin

[@barrywood2730]

Do you know they could just do away with IR35 by bringing in a simple tax system and charge the end-client a modist tax for employing the use of a contractor . Basically, if your company employs the services of a contractor then you must pay a contractor tax for the time the contractor is providing the services to the company. This might be simplistic, but think about it, if a contractor was doing the same work and employed directly to the firm then the firm would have to pay 13% national insurance anyway. By HMRC charging a contractor tax to the end-client you could get rid of this "hated!" IR35 regulation, the tax man would get additional tax revenue and the contractor (the innocent party in all this) wouldn't have to worry about this regulation ever again.

[@debaccountants]

HI Barry - Rather than change the system HMRC are extending it's scope in April 2020. This will extend the current system that applies to Government bodies, to now apply to end users that are large or medium sized entities. This effectively applies IR35 at the employer level, rather than at the intermediary company level. This will make affected subcontractors effectively employees, but without the usual benefits that an employee would have.

[@debaccountants]

If only we lived in a simple world. HMRC do not care how much complexity they create for businesses, as long as it makes it easier and cheaper for them to get more and more tax from businesses.

[@gillianeastwood5152]

Very helpful video, called dB accountants and extremely helpful. Gill Eastwood

[@profbaldwin77]

needed to add only if your turnover is above that of a small company

[@debaccountants]

Not sure what you mean? Changes are coming into effect in April 2020 whereby end users who are bigger organisations will have to apply IR35 from above. However, this does not apply to small contractors. In all issues relating to the worker however, the level of turnover does not have any relevance as far as I am aware.

[@arslanemoeye1764]

im wokring as IT contractor via umbrella company and not setup limited company, can my substitue be from off shore ? this is remote work ( from home ) and my subsitute is based in india.

[@debaccountants]

Using a substitute worker, especially if your customer is aware of it and accepts it, is one good indicator that you are self-employed rather than employed for IR35. However all factors need to be taken together and considered not just one of them. If you operate through an umbrella however I am not too sure you will have the opportunity of arguing your point. That is why most people set up their own company rather than using an umbrella company. That way they can get advice from an accountant who they can speak to and thereby have greater control over their situation.

[@louiselogan4049]

My husband is a contractor and is paid through PAYE with an agency. I'm so confused. What does he need to do?

[@debaccountants]

Hi Louise. Does he work through his own Limited Company?

[@debaccountants]

Hi Louise. Does he work through his own limited company?

[@louiselogan4049]

@@debaccountants No he doesn't.

[@debaccountants]

@@louiselogan4049 if he is not operating through a limited company, and is operating simply as sole trader ship, then IR35 should not apply to your husband. The risk relating to his status would be carried by the people that he is working for. So nothing to worry about.

[@arslanemoeye1764]

@@debaccountants im wokring as IT contractor via umbrella company and not setup limited company, can my substitue be from off shore ? this is remote work ( from home ) and my subsitute is based in india.

[@cengiz246]

4:19 umbrella companies, 6:35 the ir35 pushes all additional taxes and contributions on to end user

[@davidedwards-brown716]

Sorry Jameses - I had not noticed your response. IR35 has changed since I did the video. For someone working for a Govt. Body it is the end user that takes the responsibility for the IR35 issue and thus the tax consequence do, as you say fall on the end user if it is a Govt Body. However, if you do not work for a Govt.Body it is the Intermediary - ie the limited company that takes the risk, and should IR35 not be applied by the company, HMRC can and will chase the individual. See the high profile case re Kristy Ackroyd www.contractorcalculator.co.uk/ir35_bbc_christa_ackroyd_539010_news.aspx

[@emmyloveschris]

Hello, I'm trying to understand IR35. My partner has his own Limited company (only director) he pays CIS as he works in construction (crane driver) .... He receives a yearly salary below the NIC threshold and pays himself dividends. I'm not sure how this affects him. He is essentially his own employee. If you can help me understand if this affects him.? He invoices bigger companies and is essentially a sub contractor to them.

[@OldFatGit]

Assuming he is not 'plant and operator' i.e. just labour only, the contractors are obliged to do an IR35 assessment on the services he performs for them (I assume they are the Tier 1 contractors, as smaller contractors not caught). If so (use HMRC's CEST tool to check yourself) then IR35 will take priority over CIS i.e. he will have PAYE & NIC withheld rather than any CIS deduction. NB! If he has gross payment status, there is a really good strong argument that he should be outside of IR as (1) he would have convinced HMRC he has passed in the 'in business' test and also passed 'the compliance test' (which includes operation of IR35 when applicable).

[@emmyloveschris]

@@OldFatGit he operates a crane.. does that mean he is subject to IR35?

[@OldFatGit]

@@emmyloveschris It all depends on the terms of the engagement. If you took away the LTD company could he be seen as more akin to employment i.e. does he have to do the work personally, or can he get someone else to do his job for him? It he controlled over how (probably), when and where he performs the services? Can he make a financial loss on the job or could he profit by sound management (more akin to self-employment) or is he paid a day/ weekly rate regardless? Does he accept the work he is offered by the contractor, or can he turn it down and go to work for someone else? Does he have his own (not home) business premises and significant overheads? It is not ideal, but search 'HMRC CEST' and do the questionnaire -it will give you a good idea. I would "guess" he would probably be within IR35 from April 2020 (if it is not postponed again by Brexit and/or a General Election - HMRC said it will not be postponed again, but I think it probably will be to be honest).

[@randyvalantino6850]

The default position by big employers like house builders should be employment . Not sub contractors or umbrella companys or employment middle men

[@debaccountants]

If he is taking a minimum salary and dividends, then he is working on the assumption that IR35 does not apply to him. If he cannot support the argument that he is genuinly self employed ( based on an overall view of the facts of the situation) then he is operating at risk and you need advice. Give me a call on 01226 245824. The situation changes after 5th April 2020 when the bigger companies that he works for may impose IR35 from above when the new rules take effect.

[@scippio3]

sort your sound issues out i couldnt hear half of it

[@debaccountants]

Thank you for your helpful comments. We all learn as we go. I have learned a lot fast about making videos. The one in question was done a long time ago. I think I have improved since. However in all this time and thousands of views, you are the only one to mention it. Could it be that the problem is at your end?

[@fireside9549]

Not sure what you mean? Sound was perfectly clear.

[@debaccountants]

@@fireside9549 thanks Tom. We all learn from experience. I've learned how to record sound better. However, as my aim is simply to help people I feel the quality of sound is somewhat trivial.

[@randyvalantino6850]

If you are a sub contracor and you have men woring for you . You are an employer

[@debaccountants]

Hi Michael - if you have men working for you, then that is good indicator that you are not an employee and are in fact self-employed. The ability to send a substitute, which is actually acted upon, is very persuasive in questions of status.

[@randyvalantino6850]

@@debaccountants I have been a self emoloyed sub contactor joiner for 30 years working on new house build , you dont have a choice if you look for work its all self employed , most of the time you work for another sub contractor . He will have a few sites for one of the house builders he could ha 100 men working for him and not pay any employment costs at all . He will tell you what site you go to and what work for that day a price or day work . You wonder why few people are coming into the construction profession any more , no holiday pay no sick pay i know men working past retirement age because they dont have a pension. Yet barret have record profits