IR35 The state of play today, perhaps a surprise.


This is the original 1 9 9 4 enactment requiring agencies to operate paye on workers, 25 years ago is a long time and is long forgotten:

So, now the current state of play.

Part 2, Chapter 7 Income Tax (Earnings and Pensions) Act 2003, section 44(2)(a)

(a)the worker is to be treated for income tax purposes as holding an employment with the agency, the duties of which consist of the services the worker provides to the client, and
(b)all remuneration receivable by the worker (from any person) in consequence of providing the services is to be treated for income tax purposes as earnings from that employment, but this is subject to subsections (4) to (6).

Note that this is complex like the original rules when first enacted in 1994, but then law evolves like everything else and the complexity now is actually more clear than it was then, I think.


HMRC’s point of view is very clearly demonstrated by this:


That word manner is crucial. It’s telling you how to do your job. Employees are told how to do their job, where the self employed are not. We don’t tell our plumber how to plumb, this is self employment. We may indeed tell our dometic cleaner how (we want them) to do the work: that’s employment. Not in fact exercising this power is not conclusive, one has to be able to demonstrate one does not have the right so to do, whether exercised or not.

Guidance examples

HMRC’s guidance example are skewed so that where there is no right, the circumstances are highly unlikely when the outcome does not suit HMRC. I.e they are not subtle at all, whereas life is. I suppose they are trying to present clear examples, but unfortunately they are thus unrealistic. Nothing strange in being biassed towards paying more taxes for a tax collector.



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