How Do You Work Outside of IR35
First you need to understand that IR35 status is based on a number of different factors. Please note that you don’t want to work outside of IR35 otherwise you might be caught by HMRC and receive quite the hefty fine. Therefore, the aim that you would want would be to work within IR35 and show that you are a genuine business and not simply using a company in a way that you would pay less tax.
Would you purchase goods or services from a company without a website?
I think the answer here would be no. However, most self-employed people that you know don’t have anything like that which isn’t always the best as you want to approach contracting like you would any normal business. Therefore, a C.V. isn’t the only thing you are going to want but an actual branded business if you wish to work outside the IR35. Think of it this way, when you buy yourself a McDonalds you aren’t getting Mr McDonald himself to make you a cheeseburger but the company and its staff members.
This being said when you come across as a contractor who isn’t working within IR35 and in fact owns their own contracting business, you need to come across as a professional body. Then again if you have signed a contract then you need to read how it specifically outlines either you being employed by the company or whether they want you for your services but haven’t stated employment. Confusing we know but unless you read the contract then you won’t know for sure.
A contractor should be entitled to find a substitute in case of absence
The difference between a contractor and an employee (check employment status if you are unsure which you are) is that an employer does not have any right to demand that he finds a replacement and then to pay them out of his own pocket. As a contractor this should be stipulated in the contract you sign. Depending on the sector whether it be the private sector or the public sector you are working in, it could be difficult to find a substitute. However, this is more the problem with the organisation and recruitment process that the company that you are contracting for.
The next question we have to ask you is that are you able to find a substitute? Well, in most standard contracts you have the right to find one as does the introduction of the Intermediaries Legislation in 2000 states. One problem you are going to have is if you are ill on very short notice where do you think you will be able to find someone? Unless you have a full proof plan in place it seems pretty unlikely. Unfortunately, this is also how HMRC would see this an are more than likely to shut down this kind of thinking with ease, unless you actually are able to find a substitute for illness every time this happens. You aren’t getting away with these tax advantages and low costs at this point now.
Are you stronger or weaker in the IR35?
One of the questions that you are going to want answering if you are a contractor in either the public sector or private sector is the one stated above. Of course, there are risks if you decide to work outside of the IR35. Now as of April 2019 if you have signed ir tax dodging contracts then you need to know your employment rights and also the issues you might face if HMRC knocks on your door. The best way to do that is to use the Employment Status Service tool. If you don’t agree with this tool then fortunately, there are many similar tools out there on the web. However, HMRC stands behind the tool and may not agree with your use of other tools. As we have said before checking your employment contract is very important, reading what it contains will a lot of the time, give you the risk alerting you might want to see.
If you are still confused about whether working in or outside of the IR35 is best for you the why not get in touch with us by taking a look at our contact form and filling it out. In our view it is always the best to stay in the IR35 as we are an IR35 compliant company that makes sure that our clientele are all contractors that understand that the IR35 is a must. Otherwise you might be caught by HMRC and made to pay any extra taxes, this is either added to national insurance or in another way of assessment.