If you find yourself, your contract and working practices being challenged for a piece of legislation entitled IR35 – the process always starts with an initial Employer Compliance Review.
Employer Compliance Review
If you come under an Employer Compliance Review, it basically means – according to HM Revenue and Customs – which the contractor, you, will have to submit your books to be reviewed to check that you are paying the correct amount of tax (NI and PAYE). Also, you will be checked as to the completed status of your P11D form, and that is correct. In the result of discrepancies, the status will get a whole deal worse – moving to a thorough investigation of your practices. Sometimes though, it is unclear that a few limited companies are investigated for IR35 – but it can be put down to a couple of reasons.
Paperwork
Paperwork might be requested by the HMRC, and then the local status Inspector will receive all of your details. In the event of an impasse being reached, HMRC will bring about Regulation 80 Determinations (for tax) and something called Section 8 notice, which are both judged upon the said calculation.
You can then disagree with the decision made by the HMRC; you make your dispute with the IR35 unit. This is not a quick process, and it will take lots of paperwork to be supplied as additional evidence from your side to legitimate your claim. If you do indeed have enough evidence, you can request (this is stated by the HMRC) “a formal section 8 NIC’s decision against which you have a right of appeal”.
It is important to remember that if you are contracting within IR35, you are entitled to the same tax as a permanent employee. If you are outside IR35, you will pay the same as the regulated tax price of a contractor for a limited company. In most circumstances, people that try to do their best to avoid paying required limited company contractor taxes that come a cropper and become challenged. Accountancy firms can advise you upon IR35 contract status, which give you a bit more clarity.
Tags: Circumstances, Company Contractor, Cropper, Determinations, Discrepancies, Employer Compliance, Hm Revenue And Customs, Hmrc, Impasse, Ir35 Tax, Limited Companies, Limited Company, Nic, P11d Form, Paperwork, Section 8, Tax Legislation, Working Practices
