IR35 Summarised

Many contractors own limited liability companies which they use to invoice clients and remunerate themselves

This is tax efficient because salaries can be subsidised by dividend payments, which are free of National Insurance and personal tax. However, to ensure eligibility for those tax advantages, you must consider IR35. This legislation prevents normal employees avoiding taxes by swapping to a contract relationship with their employer.

Xperian Recruitment’s contracts support IR35 with the key points, as follows:

Scope of work

The scope of work defines which is to be completed, avoiding general points of ownership or responsibility.

Right to substitution

With reasonable notice, you will be in a position to substitute yourself for another, equally qualified individual during the term of the contract.

Notice Period

A supply contract is not an employment contract, so notice periods are ill-placed. However, the HMRC is lenient with notice periods of no less than 1 month.

Business-like Trading

Running a business can’t be achieved invisibly. We will require evidence of a genuine trading entity with the usual business trappings, such as the insurances, VAT registration, business cards, website and other marketing elements.