Quick steps to improve your IR35 status
IR35 the contractor legislation is still here and there’s no way to avoid it unless you have detailed knowledge and experience. With the help of proper contractor tax calculation, experts and professional agents can help you improve the IR35 status. After all it is important to safeguard the business against HMRC investigators. Though it sounds simple, most of the employees have a difficult time to safeguard their salary and most of the contractors do not have clear knowledge.
What is the Grey zone?
If you are a contractor, you would come across this term. It means when a tax inspector investigates your income and tax calculations the outcome may go either way. It could leave a positive or negative impact. If the tax investigators find that you are operating outside IR35, you are likely to be in the safe zone but if you are operating inside, you are in the bad situation which needs immediate attention.
Ensure your business is outside IR35
It is your responsibility to make your business competent and compliant with the rules and regulations. Here are five easy and simple steps every limited company contractor should follow in order to make sure the business is outside IR35. Retention has immediate and direct consequences to your income but in order to create a good business impression with the IR35 inspectors, you need to prove your business entity.
Business Activity and its evidence
It is important to have an IR35 reviewer or specialist to look into the contract. They are professionals who have immense knowledge with the latest changes and updates happening in their field. It is important to commit your business to them and they can review the positive and negative impacts of your business. They will also keep the records safe and take actions when needed. They can calculate the contractor tax and find out what is good and bad for you.
You need to have a clear document that shows that you are a genuine contractor. The document must be crystal clear and it demonstrates the facts that you are not a disguised employee.
Insurance and risk acceptance from all angles
When you are holding business insurance you must accept all commercial risks even as a contractor. Public liability, professional indemnity, E-risks and other business risks must be handled. You need to pay the regular insurance premium and distinguish your company from the disguise employee. You need to know what the inspector expects and ensure you provide all relevant details to prove your worth.
Do you have a substitute to continue the role during your absence? While rising the contract, it is important to mention about the substitute. Whether the business needs a substitute for a day, week or any longer, you need to be able to provide them as a workaround. This will also help you to build proper business relationships.
As a contractor, you are eligible to provide complete details of the end client. During IR35 enquiry, the panel will ask you to submit documents related to the clients and it will reveal the actual relationship between you and the client.