IR35 Status Review - Brookson Ltd

IR35 Status Review

At Brookson we place great emphasis on compliance with IR35 regulations and are delighted to offer in partnership with Brookson Legal Services, unlimited reviews to all Limited company customers, as part of our all-inclusive service. Your IR35 status is dependent on both the terms of your contract and your working practices.

Brookson Legal Services is able to offer all of our customers 3 types of IR35 review:

  • Pre Assignment Review If you send your contract to Brookson Legal Services before your assignment starts, they will review this for you and provide you with helpful advice on how your contract affects your IR35 status.
  • Full Assignment Review If you send your contract & Employment Status Assessment Form (ESA), Brookson Legal Services will carry out a full review on your assignment to ensure you are compliant with IR35.
  • Refresher Employment Status Assessment (RESA) If you have been on your assignment for over 6 months and have previously had a full assignment review, Brookson Legal Services can review your working practices to ensure you continue to work compliantly by sending us a Refresher Employment Status Assessment Form (RESA).

Brookson Legal Services will guide you through the process to help you remain compliant. As a director of your company however, an awareness of IR35 and the implications when negotiating contracts will help to prevent any future complications.

Confirming your employment status by going through the Brookson Legal Services IR35 review process

It really couldn’t be easier to have an IR35 review, all you need to do is:

  • Complete and return the Employment Assessment Form (ESA) form
  • Send us a copy of your agency contract. Your employment status is dependent on both the terms of your contract and your working practices.

Both documents are required for a full IR35 review.

IR35 Review Outcomes

There are three possible outcomes following an IR35 review:

1. Taxed as PAYE

You should reconsider the tax treatment applied to earnings from this assignment.

Where an IR35 Review is given a “Taxed as PAYE” status, you will still be able to work through your limited company and receive some of the benefits of limited company working, however it is our opinion that your income from this assignment should be taxed on PAYE, with the benefit of a 5% administration deduction and flat rate vat benefit ( if applicable).

2. Caution

Where an IR35 Review is given a “caution” status, this means that we are able to suggest ways to improve your IR35 Status.

Some of the documents you have submitted to us may not fully mirror each other and changes have been suggested to ensure that you are fully compliant.

Without these changes being made, it is our opinion that you may experience difficulties in demonstrating full IR35 compliance in the event of an investigation into the tax treatment of income on this assignment. Our best advice is to ensure that the amendments we have suggested are made to the contract to ensure that you are in a better position to defend your decisions to take dividend income from this assignment if challenged by HMRC.

  • If the suggestions are made to the contract: Once the changes are made, you should resubmit the contract for another review and we will confirm your IR35 status on this assignment.
  • If the suggestions cannot be made to the contract: Where the suggested amendments are not incorporated into the contract, or are only partially incorporated, you should discuss this further with the Compliance Team. We have come across these situations many times before and can suggest alternatives to assist both you and your Employment Business/Client, whilst still achieving the original aim. We have lots of “Plan B’s”.

3. Taxed as self-employed

Where a “Taxed as Self Employed” outcome is given to an IR35 Review, it is our opinion that your contract and working practices accurately reflect each other and are consistent with being an independent contractor.

We would recommend that you complete a new Employment Status Assessment Form every 6 months whilst on this assignment to ensure that you have peace of mind that neither the law nor your working practices have changed to adversely affect your compliance with IR35 and your IR35 Status remains current.

If you change assignment, change your working practices or receive a new contract/contract extension, we recommend that you should submit your documents for another IR35 Assessment. We also recommend that you visit the IR35 Guidance section of the website regularly to keep up to date with any changes in the law which may affect your IR35 status.

How often should you have an IR35 review?

In line with HMRC best practice, Brookson Legal Services recommends that you have an IR35 review at the beginning of each assignment/project/body of work. Thereafter, you should update the review of your working practices on assignments every 6 months. By doing so you can be confident that the monies you are taking from your company are being appropriately taxed.

New Assignments through your limited company

Each time you start a new assignment, you should arrange a new contract with the agency and/or client.

Decide not to have an IR35 review

Please be aware that if you are working on an assignment taking a dividend payment, as a director of your company it is your responsibility to ensure that your status is always clear. Having an IR35 review will minimise the potential financial risk to you and your limited company. It is important to determine your IR35 status before deciding whether or not to pay yourself a dividend.

In order to take dividends compliantly you need to be sure that you are self-employed for tax purposes (i.e. compliant with IR35).

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