The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
Ever since its introduction in 2000, the IR35 legislation has been consistently problematic. In particular:
Each of these is discussed briefly below.
The original press release which introduced the legislation in 1999 said the rules were needed because service company structures had damaging social consequences. Individuals working through service companies:
“...may find their terms and conditions altered ― perhaps losing entitlement to sick pay or maternity leave. They may even lose their jobs without entitlement to notice or redundancy pay. They will usually have no right to any claim for unfair dismissal and may lose their entitlement to social security benefits through a failure to make adequate contributions.”
However, IR35 did nothing to address this situation. It deducts employee’s and employer’s National Insurance contributions (NICs) from the workers’ deemed salary, because the individuals are deemed to be ‘disguised employees’ of their clients. Employment law does not recognise this status. This means, for example, that individuals cannot claim unfair dismissal if their engagement is terminated, they have no rights to statutory redundancy and cannot normally obtain Jobseeker’s Allowance.
This has created a sense of unfairness about the whole regime, even before considering the practical issues faced by those potentially affected.
Calls for the abolition of the IR35 rules
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