IR35 is HMRC’s way of dealing with personal services companies when they think that a taxpayer (sorry, customer) is getting too good a tax deal by operating through a limited company and paying himself too much by way of dividend and too little by way of salary. Specialist units are to be set up in Salford, Edinburgh and Croydon to concentrate efforts on these wicked taxpayers (sorry, customers).
On 9 May HMRC published business entity tests to risk score companies so as to decide where to concentrate efforts. There are 12 tests mentioned, the business premises test, the previous PAYE test, the right of substitution and actual substitution tests to mention just a few.
Space doesn’t allow full details of them all but if IR35 is a concern to you and you want some ideas as to how likely it is that they’ll pick on you, give our tax partner, Simon Topperman, a call.