IR35

In April 2000, legislation was introduced to prevent individuals having the benefit of the tax advantages of running a Limited Company, unless they are legitimately running a business through that Company.

HMRC’s view is that, based on the terms of the engagement contract, many ‘one-man bands’ working through an agency in sectors such as IT, engineering and medical may be ‘disguised employees’ and therefore, avoiding tax through use of their own Limited Company.

If you are not an independent contractor and you are caught by IR35, your Company’s gross fee may be deemed to be your salary and be taxed accordingly. The financial implications to a contractor falling inside IR35 are estimated to add up to around 20% less in their pocket on a monthly basis because all income would be taxed as PAYE salary.

You can determine whether you fall inside or outside IR35 by visiting the HMRC website at http://www.hmrc.gov.uk/IR35 Alternatively, we can refer you to experts who will determine your IR35 status quickly and easily. Call us for more details.

MANAGED SERVICE COMPANY (MSC) LEGISLATION

In 2007, the Government introduced legislation aimed at persons operating a Limited Company through a third-party provider. A provider is defined as "a person who carries on a business of promoting or facilitating the use of companies to provide the services of individuals". Such providers and the people who use them may have certain liabilities under the legislation.

In simple terms, to avoid this legislation you must be in full financial control of your own Limited Company and must not leave important decisions in the hands of a management company. HFFS does not make decisions on your behalf. All financial and business decisions concerning your business will be yours to make, with HFFS there to assist.

Using HFFS means that you stay in control. If you have any queries about this, please feel free to contact us directly, or go to:
http://www.hmrc.gov.uk/employment-status/msc-guidance-july07.pdf