A tailored IR35 mitigation strategy for your business.
We Do Code will work with your business to put in place a tailored IR35 mitigation strategy that works for you, your business and any contractors currently working with you that you wish to retain. With the right IR35 mitigation strategy, your business and contractors you work with will stay on the right side of the private sector IR35 reforms coming in April 2021.
What is IR35?
IR35 refers to a piece of legislation introduced in 2000 to counter tax avoidance by personal service companies. Contractors often provide their services via limited companies for tax efficiency reasons as it is more tax-efficient to do so for both them and their clients.
Working through personal service companies means that you pay corporation tax on your company’s income and dividend tax on your personal income, while not paying class 2 or class 4 national insurance contributions. Clients of the personal service companies also avoid paying employers national insurance contributions that they would do for an employee.
Tax efficiency isn’t the only reason that contractors provide their services via limited companies. Companies choosing to use contractors will often insist on contractors using a limited company for insurance purposes as they will be able to secure professional indemnity insurance and public liability insurance to cover against any claims they would make against the contractor.
Get in touch.
Drop us a line to discuss your IR35 Mitigation strategy. We Do Code will tailor a strategy that works for you, your business and any contractors that your business is currently working with that you wish to retain.
What is changing in the IR35 reforms?
The determination of whether a contractor is inside or outside IR35 has always been with the contractor. The responsibility for IR35 status determination changed from 6th April 2017 when the Finance Act 2017 came into effect. The IR35 status determination became the responsibility of the public authorities instead of the contractor.
The Government announced in the 2018 Autumn Budget that the private sector would also face IR35 reforms. The private sector IR35 reforms will put the responsibility of determination on the company hiring the contractor.
When do the private sector IR35 reforms start?
The private sector IR35 reforms were due to take effect from 6th April 2020 but, due to the coronavirus pandemic, the Government announced on 17th March 2020 that the private sector IR35 reforms would be delayed until 6th April 2021.
Which companies are aff ected by the private sector IR35 reforms?
The private sector IR35 reforms will only affect those companies that HMRC class as a large company.
A large company is a company that meets two of the three following criteria;
- Turnover exceeding £10.2m
- Balance sheet exceeding £5.1m
- More than 50 employees
If your company does not meet the criteria of being a large company, the responsibility for the determination of whether a contractor is inside or outside of IR35 remains with the contractor.
If your company does meet the criteria of being a large company, from 6th April 2021, the responsibility will be yours.
How can you help my business with IR35 mitigation?
Whether you are a large business or not, you can keep your business and your contractors on the right side of the IR35 reforms by having the right IR35 mitigation strategy.
We Do Code can help your business with IR35 mitigation with a tailored strategy that works for your business. We Do Code can become the end- client and take on the responsibility of IR35 status determinations through statement of work contracts. We Do Code can also provide resource through our resource augmentation service.
How do statement of work contracts work?
In a typical service contract between a business and an IT contractor, the IT contractor will be paid a day rate for their services for a fixed period of time. With statement of work contracts, the contractor is paid when agreed milestones are met and for deliverable pieces of work.
I’m a contractor; how can you help me with IR35 mitigation?
We Do Code can provide you with statement of work contracts to replace your existing contracts with your clients. We will then become your end- client and negotiate statement of work contracts between We Do Code and your existing clients.
We Do Code also provide a range of software development services to our own clients and we may be able to open doors for more opportunities for you through the projects that we secure.
Get in touch with We Do Code today to discuss your IR35 mitigation strategy. We Do Code will tailor a strategy that works for you, your business, and any contractors that your business is currently working with that you wish to retain.
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Get in touch today to discuss your requirements and how you can leverage our years of experience to take your business to the next level.