Over the past few months, you may have heard a lot of talk about “off-payroll working rules”, or “IR35”. It is also highly likely that this is something which you will have dismissed out of hand, as it seems to be an abstract piece of tax legislation.

Essentially what this legislation is doing is targeting all those who HMRC believe should be taxed as an employee rather than through Self-Assessment.

So surely you would know if this applies? Well, it’s not as clear cut as it first appears.

Firstly, note that HMRC is beginning to look at the underlying working reality as a way of judging these cases (for example, a contract that states that you are self-employed doesn’t necessarily force HMRC to agree). This is a highly complex area of tax law which is being continually updated, so the below are only the broad brushstrokes of the situation.

Let’s take a standard self-employed associate dentist (or an associate dentist who operates through their own limited company). If you run through HMRC’s guidance as to what constitutes employment, then you may come to the conclusion that all associates fall afoul of this rather detailed legislation. So why then are the vast majority of associate dentists carrying on in self-employment, and not caught by these rules?

Well, it all boils down to the correct structure being in place. HMRC still specifically acknowledge that as long as an associate adheres to the standard BDA or DPA model contract, they will be protected from this legislation.

What’s the point of this blog? In an age of increased aggressiveness from HMRC, it is vital that any person who operates in self-employment, or via a limited company, takes the time to ensure that they both have the correct contract in place but also that the working arrangements, in reality, reflect the written agreement.

This is becoming more important as HMRC seek to move the responsibility of judging whether an individual breaches these rules away from the individual and towards the “paying” business (from June 2017 responsibility was transferred to public sector bodies making payments, ). If the same is done within the private sector, it may not be long until we see people being told that they are caught under IR35 – solely because that is the path of least resistance.

If you would like to optimise your tax position call 01872 300232 or email hello@hivebusiness.co.uk.