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| IR35 |
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Taxation of Limited Company Contractors
As most of you are now aware, the Inland Revenue has now implemented
revised plans on the taxation of Limited Company contractors.
The main changes are:
1) The new rules on tax and NI will depend on the existing tests
used to determine employment or self-employment for tax and NI
purposes. These tests are likely to be more familiar to many businesses
and to limited company contractors than the 'control'
test the Government originally intended to use.
2) The limited company contractors themselves will be responsible
for making sure the new rules are followed, rather than agencies
(or their clients) as was proposed originally. The proposed certification
scheme will not therefore be implemented.
3) The limited companies themselves will be responsible for applying
PAYE and National Insurance Contributions to all earnings from
engagements caught by the new rules, after allowances for expenses
and pension contributions.
Basically, this means that Limited Companies will remain and the Inland
Revenue has abandoned certification as unworkable. The Inland Revenue
are currently discussing the detailed proposals and the implementation
of them with interested parties. However we recommend all Limited
Companies take professional advice in regard to the proposals, which
came into effect in April 2000.
Further information relating to the proposals can be found on the
Inland Revenue Website
or from Tax and Accountancy specialists.
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