Tips to Help Me Improve My IR35 Status
IR35 also known as intermediaries legislation is a type of tax that shields contractors against HMRC investigators. Its core work is to differentiate between genuine businesses and contractors. It’s tax legislation intended to stop works from falsely branding themselves as contractors in order to enjoy tax benefits. As a contractor, you must always make sure you are IR35 tax compliant. You can better your IR35 status in these easy steps.
Give Evidence of Business Activity
All the contracts you win should be properly reviewed by an IR35 specialist. In case you don’t make it get your contracts reviewed by an expert, you should write down the actual working practices. Having all the data in form of writing will make things easier for you when HMRC investigators come after you. You must write down valid reasons to prove your authenticity as a contractor.
Take A Business Insurance
Possessing professional indemnity insurance is the best and safest way to strengthen your IR35 status. HMRC consider contractors who have professional indemnity insurance as self-employers. They have even included insurance as one of the basic tests every contractor should pass during the maligned business entity test. The good news is that you can buy all the insurance policies for less than 20 dollars.
Offer a Substitute
Offering a substitute can help strengthen your IR35 status. A substitute proves your genuineness and ensures any contract that hasn’t been reviewed by an IR35 representative won’t land you into trouble. But for your status to be stronger, your contract should be offered in the person of a self-employed. This makes sure that you have a strong substitute ready and serves as an agreement between an individual and a client.
Exercise Total Control
When setting IR35, you have to make sure that in all the contracts sitting outside the IR35, you offer services in a way that’s opposite to client’s direction. In other words, you have to exercise control over the work you do by delivering exactly what you agree with the client but avoid working under supervision by all means. The best way to do this will be by working away from the client’s working hours. You have to make sure you are working as a self-employed worker.
Ensure there is no MOO
When working as a self-employed contractor, you must prove that there isn’t such thing as Mutuality of Obligation. Mutuality of Obligation is the obligation employers offer for work to be paid. You can demonstrate that MoO doesn’t exist by conducting extra work for additional payment, rejecting all jobs that don’t fall on your contractor, and making the termination period as short as possible.
These are the best ways to help you boost your IR35 status. They may not be the easiest ways to strengthening an IR35 status but if done properly, they will definitely deliver the best results. Make sure you understand and implement each of them proficiently otherwise you will find yourself against the cruel hands of HMRC investigators. Have a strong IR35 and continue winning and working on contracts without having to pay heavily on taxes.