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The Government has been planning to clampdown on people who work for them but who do so through their own companies. This follows adverse publicity with several high profile cases of perceived misuse or abuse of the laws, and the Government's desire to be seen to be putting its house in order.
Although the final detail is still unclear, it is generally accepted that the onus could be on the freelancers to make a case for their own business.
Freelancer group, the PCG has been analysing what is known and what is expected for freelancers operating in the public sector.
The facts
It would seem that limited company contractors will be required to provide “assurance” to their engaging organisation that they are meeting their income tax and national insurance contributions. To date, there is reported to be a number of options as to how to do this:
- voluntarily operate IR35
- treat all the income from their engagement as salary
- use HMRC’s confidential contract review service to establish that IR35 does not apply
- provide some other kind of evidence that IR35 does not apply.
For those wanting to use the 'other kind of evidence' the PCG recommends using self-assessment via the controversial HMRC business entity tests or seek a contract reviewed by a reputable specialist.
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Susie Hughes © Shout99 2012
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