Accountants For Contractors
These days more and more people work as contractors. We have many clients who are contractors and therefore have great expertise in the sector.
Whichever sector you work in – IT, construction or advertising etc, you work on a fixed term contract, providing services to a client.
The most common and tax efficient approach is to operate via a limited company, which HMRC refers to as an Intermediary.
However you will need to be aware of The Intermediaries Legislation known as IR35.
IR35 looks at the relationship between you and your client on each contract you undertake and decides whether you are, in actual fact, an employee of that client.
This would be classed as being “inside the scope” for IR35 and therefore HMRC will want to ensure the payments made to the intermediary have tax and national insurance applied correctly.
It’s your client’s responsibility to ensure that they define your employment status correctly and apply the correct taxation to the money paid to you.
For you as the director of the intermediary, it is your responsibility to also assess what the relationship would be like if no intermediary was involved.
The contract of engagement is the key document to assist in deciding the relationship status.
This is where our expertise is so important as it can all get a bit complicated.
We will review your existing and pending contracts and advise you whether you fall inside or outside the scope of IR35 and so calculate the amount of tax and NI you owe.