HMRC has issued new guidelines on IR35 intermediaries' legislation. These guidelines effectively replace its frequently asked questions concerning IR35. The new guidelines are fairly detailed and set out HMRC's views on those affected and how the legislation operates.

By way of background, IR35 can potentially affect those who provide services to a client through an intermediary, such as a limited company or partnership. IR35 can operate to apply payroll taxes to fees received relating to those services. IR35 is considered on a contract-by-contract basis and additional tax and NIC may become payable on payments received by the intermediary. The legislation and its application is a complex area, which has been the subject of much debate and uncertainty over the years.

The new guidelines http://www.hmrc.gov.uk/ ir35/intermediaries-legislation-ir35.pdf may provide some assistance in this area although uncertainties are expected to remain. A detailed review of the working relationship between individual and client is always recommended if there is any concern for the intermediary that IR35 may apply.

The new guidance issued covers:

  • the basics of the IR35 legislation;
  • in principle how to work out if IR35 may affect any payments received by the intermediary – as noted above, this may not be straightforward;
  • if IR35 applies, the method of calculation of any tax and NIC liability;
  • the HMRC helpline offering assistance on IR35;
  • enquiries by HMRC into IR35 status; and
  • where to find further guidance.

For those using an intermediary vehicle or otherwise interested in the subject, in 2012 a set of business entity tests was drawn up, with assistance from interested parties and bodies. This was intended to identify scenarios where there was a risk of HMRC making an IR35 enquiry into an intermediary.

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