IR35 & Agencies
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Hi all - I can't quite get my head around this. I thought that I was quite comfortable with IR35 but I have just taken on a new client who is working through an employment agency as a limited company.
All well and good, but the jobs he is doing are clearly admin jobs which, in my opinion, are hard to argue that he is anything but a temporary employee when you apply the usual rules.
Yet this doesn't seem to be recognised by the 'employer' or the agency. As both are national companies with far more resources at their disposal than I, I can't help but think that I am wrong to think that there should be an element of PAYE deductions as per usual IR35 rules.
The more I have researched this the more I become confused as apparently many people coming to this country set themselves up as limited companies and the obtain work through agencies specifically to avoid tax.
I would wager that I haven't woken up and smelled the coffee on this area yet ! - any experience to guide me on this would be welcomed.
Many thanks
All well and good, but the jobs he is doing are clearly admin jobs which, in my opinion, are hard to argue that he is anything but a temporary employee when you apply the usual rules.
Yet this doesn't seem to be recognised by the 'employer' or the agency. As both are national companies with far more resources at their disposal than I, I can't help but think that I am wrong to think that there should be an element of PAYE deductions as per usual IR35 rules.
The more I have researched this the more I become confused as apparently many people coming to this country set themselves up as limited companies and the obtain work through agencies specifically to avoid tax.
I would wager that I haven't woken up and smelled the coffee on this area yet ! - any experience to guide me on this would be welcomed.
Many thanks
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Comments
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Re:IR35 & Agencies
As far as I understand it, as your client is providing his services through a Ltd Co then the onus will be on him to calculate any PAYE liabilities due on income from relevant contracts under IR35.
The 'employer' and agency will have no comeback from HMRC if they have a PAYE compliance visit, as the services were provided by a Ltd Co and as you always hear, you cannot employ a Ltd Co.
Many large companies tend to insist on people providing their services through a Limited Co simply for this fact.0 -
Re:IR35 & Agencies
This is a subject which seems never to go away.
Whilst I agree that the Ltd Co payee does have the main IR35 burden both the agency and the end user cannot relax because a compliance check, if it is done properly, will look carefully at the true relationship between the worker and the end user of the services provided.
A lot of organisations are now insisting on ltd co status in order to protect themselves in these circumstances but I cannot see how that can be. As soon as the worker starts to fulfil the role of an employee and become integrated with the end user then HMRC will see them as a paye case and may still pursue the end user. The existence of an agency and a ltd co will be seen merely as a method of circumventing the tax system.
I was surprised to find recently that Reed have a "consultancy" arm which seeks to achieve this.
One other thing to consider is HMRC's intention to have a very detailed review of status following their resounding "success" with the construction industry. I am not sure they have achieved success unless you look at it from purely a cash point of view.
I would suggest that you review the contract your client has, all the written details and then examine the manner of working in order to form your own view of the situation.0 -
Re:IR35 & Agencies
Many thanks for your replies.
I think that the way forward in this case is to work on the basis that a deemed payment will need to be taken into account at the year end.
This seems to be another of those un-nerving situations where you get your client to do everything by the book and others will not...and probably get away with it.
Anyone else with interest in this thread may wish to have a look at this link :
http://www.hmrc.gov.uk/leaflets/guide_limitcomp.htm
Many thanks0 -
Re:IR35 & Agencies
Depending on how much we are talking about there is a support group for contractors on the net. One of our clients (I thought but it's not been contested by HMRC) would get caught by these rules but used this site (you pay a subscription of about £200 a year) and they wrote contracts for her and will help her out if they're challenged. If nothing else they will be able to advise.
http://www.pcg.org.uk/cms/index.php
Hope this helps
Annette0