Sep
13
2010
Contractors 'may suffer in IR35 reform'
Posted by Sarah Putt
The options available to the government as it plans to reform the IR35 tax laws could have negative effects on contractors, which could interest those looking at umbrella companies.
One method that David Jetuah told Accountancy Age could be bought in is the proposal of introducing the simplified status tests, which is currently associated with the construction industry.
These tests are believed "to reflect the true nature of engagements", thus highlighting the need for various company and freelancer relationships to be recognised.
However, some parts of this test could be concerning to contractors, with one stating that a worker is employed if they do not bring their own tools to the place of work. A building contractor will therefore be safe it they only need to bring a toolbox of supplies with them, whereas those who need to drive a crane as part of their work would likely be termed as employed.
This could present problems, however, and Mr Jetuah adds: "A self-employed concert pianist does not take their grand piano to every performance but uses one that is in the concert hall."
Many areas of confusion still exist more than a decade after IR35 was first introduced, which included Kate Cottrell, a former Inland Revenue tax inspector, recently had to reassure one contractor that filling in health and safety forms does not usually affect IR35 eligibility, Contractor UK has reported.
The options available to the government as it plans to reform the IR35 tax laws could have negative effects on contractors, which could interest those looking at umbrella companies.
One method that David Jetuah told Accountancy Age could be bought in is the proposal of introducing the simplified status tests, which is currently associated with the construction industry.
These tests are believed "to reflect the true nature of engagements", thus highlighting the need for various company and freelancer relationships to be recognised.
However, some parts of this test could be concerning to contractors, with one stating that a worker is employed if they do not bring their own tools to the place of work. A building contractor will therefore be safe it they only need to bring a toolbox of supplies with them, whereas those who need to drive a crane as part of their work would likely be termed as employed.
This could present problems, however, and Mr Jetuah adds: "A self-employed concert pianist does not take their grand piano to every performance but uses one that is in the concert hall."
Many areas of confusion still exist more than a decade after IR35 was first introduced, which included Kate Cottrell, a former Inland Revenue tax inspector, recently had to reassure one contractor that filling in health and safety forms does not usually affect IR35 eligibility, Contractor UK has reported.