Contractors get help on IR35 status

Link: Read our IR35 report

Contractor portal shout99 has launched a series of tools to help members ensure they fall outside of IR35, without having to run the risk of penalties from the Inland Revenue.

‘Freelancers Outside IR35’ (FO35) provides a manual to help determine employment status, model contracts which are outside IR35, insurance against investigation by the Revenue and penalties and support and representation from tax consultancy Qdos.

Shout99 managing director Andy White said widespread uncertainty surrounding IR35 held many freelancers back from saying they were operating outside IR35, because of fears of incurring penalties should the Inland Revenue say they ‘got it wrong’.

‘FO35 allows freelancers to make the decision about their status based on relevant information rather than fear, uncertainty and doubt,’ White said.

IR35 dates back to March 1999 and treats some freelancers or contractors operating through their own limited companies as disguised employees rather than genuine businesses for tax and NI purposes.

Meanwhile financial consultancy Giant Group is warning that IT contractors who fail to hit the 31 January deadline for filing their self assessment tax returns could unwittingly prompt an Inland Revenue investigation into their IR35 employment status.

In December, the Inland Revenue warned for the first time that late filing of a self-assessment tax return would prompt an investigation into the individual involved.

Giant Group, which also offers an IR35 insurance service through Qdos, believes the warning means the pressure for contractors to hit the deadline is greater than ever before.

Matthew Brown, managing director of Giant Group said: ‘It is essential that contractors act now or risk being unfairly targeted for a stressful and time-consuming enquiry.’

The Inland Revenue imposes an automatic £100 fine on anyone who misses the January 31 deadline, and a charge of up to £60 per day for a late self-assessment return. Penalties for late filings in 2002 jumped 17 per cent over the previous year to £76.7m, according to the latest Inland Revenue Annual Report.

‘Take care when using estimates, for example of business expenses, explain any large year-on-year changes in savings, include all income sources and, most importantly, check all your sums add up!’ Brown added.

Related reading