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HMRC enquiries on Employment Status & IR35
17 April 13 | By: Jas Jhooty
Welcome to the latest newsletter from emTax. This week we have been asked to focus on the ever popular lines of enquiry by HMRC on Employment Status & IR35.
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Employment Status/IR35 issues
With recent high-profile cases such as BBC journalists being paid via their own Personal Service Company (PSC), employment status enquiries have never been so popular with HMRC who often insist that self employed subcontractors should be classified as employees. However the HMRC view may not reflect the full picture, with employment status being a very ambiguous and complex area. The repercussions for the employer can be enormous with huge PAYE and Class 1 NIC liabilities arising if HMRC’s views remain unchallenged. If you are subjected to an employment status enquiry our advice is to ask one of our expert consultants to represent you as soon as possible.
For contractors that are engaged via their own PSC there is a temptation to think that any ‘IR35’ obligations simply arise on the PSC rather than the hiring business. Whilst this is true in most cases, a contract that is within the scope of IR35 may result in dissatisfied contractors as well as greater risk of the contractor accruing rights under general employment law, Working Time Regulations, or Agency Worker Regulations.
As always prevention is always better than cure so it would be prudent to contact us to review your current arrangements when it comes to engaging self employed subcontractors before HMRC start any enquiries. We can advise you on engagement practices and leave you with tailored contracts for services that should leave you ‘audit-proof’.
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