IR35 Advice - The Facts
Where a person interposes a limited company between themselves and their "employer" or clients, this company is known as a Personal Service Company (PSC). The benefits of this are that employer's NIC and employee's NIC can be avoided. The government became concerned at this and IR35 was introduced. The IR35 rules state that the PSC must be able to demonstrate that it has the "badges of trade" - otherwise the individual will be caught by the rules and will be treated as being employed and therefore will have to pay the same tax and NIC as all other employees.
In a tax inquiry, the contract between the PSC and the contracting party and the contractor's practical working arrangements will be of great significance. An IR35 review should therefore always be obtained for each new engagement.
For technical information about tIR35, please refer to our IR35 Centre.
