“IR35 explained” by Dave Chaplin, CEO of IR35 compliance solution IR35 Shield and author of IR35 & Off-Payroll Explained

Self-confessed ‘IR35 addict’ Dave Chaplin takes a tongue-in-cheek look at the bizarre world he’s inhabited for the past 20 years.

Do you know the subtle differences between the driver of a cement mixer, an exotic dancer, a housekeeper, a plumber, a car washer, Catholic school boarders, a hotel waiter, a football referee, Polish nationals or indeed a caravan park in South Wales? No, well unfortunately I do. Let me try and explain my world – IR35.

It all started 20 years ago

Just over 20 years ago the then Labour Government dreamt up the idea that everyone should be assessing their relationships with their clients, to establish if really they are only ‘employed for tax purposes’ – which means tax should be paid like an employee, but without actually being an employee. Makes perfect sense, right? This came in under the banner of ‘IR35’ in April 2000, where contractors running limited companies had to ask themselves the status question, the result of which could see them losing 25% of their income, and they unsurprisingly concluded it didn’t apply to them. Who could have guessed?

Time to double up on crazy

HMRC tried to enforce this through the courts and found they could only win less than half of cases, and for a long period gave up even trying. Then, in 2016, HMRC thought it would be a good idea to get businesses to ask the status question instead and renamed the now-toxic brand of IR35 as ‘Off-payroll Working’. It was introduced in April 2017, all under the waving banner of “tax fairness”.
This time it was the Conservative Party, tasked by the Treasury, to introduce more madness – whereby they had to convince everyone it was a good idea to oil the wheels of industry by making firms try to solve the equivalent of the Rubik’s Cube blindfolded every time they wanted to hire someone urgently. What could go wrong? So they gave 60,000 businesses, hiring over half-a-million contractors, the perilous task of conducting status determinations.

But this status stuff is easy, right? One just has to examine the relationship between the worker and the firm they work for and determine if it’s one of ‘disguised employment’ or not. Piece of cake – let me explain how you munch your way through it.

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