At Accountancy Champs we have detailed knowledge of legislation impacting contracting such as IR35 and S660A. We keep ourselves fully up-to-date with any relevant changes to ensure we are able offer our clients the best possible advice at all times.

We regard each contractor as an individual, and therefore provide advice tailored to your individual circumstances.

Please contact us at our London Office to discuss how we can help you.

On 9th March 1999, the Inland Revenue issued a press release detailing how  they were to close the loophole that allowed freelancers and contractors to avoid paying large amounts of tax and national insurance by using a personal service company, composite company or business partnerships. This press release was called IR35, and the legislation it announced has generally been referred to as IR35 ever since.

The government identified contractors as 'tax avoiders', due to the tax saving benefits they enjoyed from working through a Limited Company/Personal Service Company, whilst their underlying status was clearly that of a “deemed employee” The IR35 legislation was implemented in April 2000.

IR35 is the name commonly given to the tax legislation which in certain circumstances can allow HM Revenue & Customs (HMRC) to charge extra tax and National Insurance on contractors working through a limited company.

Typically your company will enter into a contract with an agency to supply your skills, whilst the agency will enter into a contract under which it will make those skills available to an end client. The way in which you provide those skills to the end client is referred to as the working relationship.

Under IR35 if the actual working relationship between you and the end client is the same relationship that exists between the end client and its normal employees, then the contract is “caught” by IR35.
This will not make you an employee of the end client but, broadly, your company will pay tax and National Insurance as if you were.

In establishing the working relationship, the terms of the contracts are taken into account but only if it can be shown that they truly reflect the actual working relationship. Note that it is the day to day working arrangements between you and the end client that need to be examined most closely.

IR35 has resulted in increased tax, NI liability and administration for those contractors using a Limited Company/Personal Service Company.

A Limited Company or Personal Service Company is a corporate structure created to handle the tax and business accountancy affairs of one contractor and is self administered with the assistance of a third party accountant. A contractor running a limited company is responsible for ensuring all tax matters, contractual obligations and employment rights are administered correctly as well as ensuring they pass self employment tests and qualify as falling outside of IR35 legislation.

It is critically important that anyone working through a limited company (and  being remunerated by way of a dividend structure) is not caught by IR35 self employment tests. If a contractor is caught, and therefore is "deemed employed", tax liabilities will accrue and could potentially create a huge liability for underpaid tax.

Our service includes full review of your circumstances in relation to IR35, we complete a full detailed review of your working relationship, consider the contract that exists and work with you to determine status and where possible the means to manage the risk associated with the legislation.

Running your own Limited Company is a very good option if you intend to remain contracting for a long-term period.

Incorporating and running your own company can lead to higher net returns after the deduction of taxes. On the one hand you get to keep more of your hard earned money; however, being the director of your own company requires a higher level of accountability and management.

With the help of Accountancy Champs you can enjoy the best of both worlds.

Using the services of an umbrella company eliminates the pitfalls and administrative burdens of running your own limited company yet gives you the benefit of being legally tax-efficient.

For a regular monthly fee you will become a “flexible employee” of which means IR35 contractors’ tax doesn’t apply. You get paid regularly and on time, with tax and National Insurance contributions deducted at source. Using an umbrella solution is a good option if you are new to contracting and may not want the initial commitment of running your own Limited Company.

Establishing a business or incorporating and running your own company often leads to higher net returns after the deduction of taxes. On the one hand you get to keep more of your hard earned money, however being the director of your own company requires a higher level of accountability and management. Taking this responsibility is part of being a career contractor.

With the help of Accountancy Champs the administration can be kept to a minimum and we are always here to guide you, meaning that you can enjoy the best of both worlds.

Operating through your own company is a wholly legitimate way of working, however IR35 needs to be considered, whenever you extract income from the company.  We assist you with all IR35 assessments and reviews so you can be sure that the decisions you take are fully informed.

Using the services of an Umbrella company can eliminate many of the pitfalls and administrative burdens of running your own limited company, yet gives you the benefit of being legally tax-efficient.
Your flexible employee status with an Umbrella company means IR35 contractors’ tax doesn’t apply. You get paid regularly and on time, with tax and National Insurance contributions deducted at source.