Solo recommends that for each contract undertaken, contract workers take independent professional advice from a specialist tax consultancy, as opposed to an accountant or service provider and undertakes a contract review of all the contractual documentation between the contract worker's limited company and the agency or hirer. Wherever possible we recommend that the contract worker endeavours to obtain a copy of the contract between the agency and the hirer in order to establish that the contractual terms in both contracts mirror one another. The actual working practices should also mirror the contracts. If the working practices and the contracts do not reflect the reality of the arrangement, the contracts will be regarded as a sham by HMRC.
It is essential to establish the employment status of each worker in respect of each contract for the purposes of IR35 in order to mitigate the risk of an unbudgeted tax bill in the future. HMRC’s website categorically states that it is the engager’s responsibility to correctly determine the employment status of workers www.hmrc.gov.uk/employment-status/index.htm. However in our experience HMRC's first point of call to recover any underpayment of tax and NIC is from the contract worker's limited company and not from the engager.
There are a number of independent experts who specialise in offering a contract review service, in some cases this includes a review of the working practices. Their fees for this service are dependent on the complexity of the arrangements. They will suggest amendments to the contract and in some cases will negotiate changes on your behalf with both agency and hirer.
In addition to the number of independent experts, HMRC provide a contract review service free of charge. You can e-mail them at ir35@hmrc.gov.uk or contact them at IR35 Unit, HM Revenue & Customs, North east Metropolitan Area, Fountain court, 119 Grange Road, Middlesborough TS1 2XA Tel: 0845 303 3535. We have found this office be very helpful, however, please take into account that it is in HMRC's interest to collect as much income tax / NIC as possible, they will not offer any encouragement or advice to assist you to be outside of IR35 and therefore pay less tax.
Independent IR35 specialists
Qdos Consulting is the UK's leading authority on IR35 status issues and to date has won over 1000 disputes against HM Revenue & Customs, resulting in tax savings of over £36m for their clients.
Solo have negotiated excellent rates for contract terms and working arrangements reviews, if purchased through ourselves. The prices represent a saving of approximately 50% on normal market rates, please contact us for details.
Bauer & Cottrell are specialist advisors in the field of tax/NIC employment status and IR35. They provide a full written report covering all the relevant issues concerning IR35 including the contract details and a simple summary of their opinion. They will negotiate on your behalf with agencies and / or clients to strengthen / amend the contract to ensure that it accurately reflects the true terms and conditions and working practices.
Bauer & Cottrell also provide an annual membership scheme called Contractor Guardian with unlimited IR35 contract reviews throughout the year. These detailed reviews include a review of the contract documents and working practices and an opinion as to whether the contract passes or fails IR35. This product is ideal for those contractor workers having multiple contracts throughout the year and costs £199.00 +VAT. You can contact them by e-mail at info@bauerandcottrell.co.uk
