Templeton Brook Witt knows that in the ever-evolving landscape of contracting, understanding the intricacies of tax legislation is paramount for both contractors and the companies they work with. For contractors, comprehending the IR35 rules is particularly crucial. The IR35 legislation, also known as off-payroll working rules, introduced by HM Revenue and Customs (HMRC), aims to tackle tax avoidance by contractors operating through intermediaries, such as limited companies. The implications of the IR35 rules can significantly impact contractors' tax status and obligations. Templeton Brook Witt stands out as a beacon of support for contractors navigating the complexities of IR35, thanks to our commitment to compliance and the expertise of our tax investigation specialists.
At its core, IR35 focuses on determining the employment status of contractors. Contractors falling within the scope of IR35 may be deemed "inside IR35," meaning their working arrangements are akin to traditional employment, and they are subject to the same tax and National Insurance Contributions (NIC) as regular employees. Conversely, those considered "outside IR35" can continue operating through intermediaries, enjoying tax advantages. Seeking professional advice from tax specialists at Templeton Brook Witt can help contractors navigate the intricate tax landscape, understand the specific implications of IR35, avoid
tax investigations and explore alternative strategies for optimising their financial arrangements within the constraints of the legislation.
Templeton Brook Witt has helped many businesses to determine whether a contractor falls inside or outside IR35 by means of a thorough evaluation of various factors. These factors include the nature of the working relationship, the level of control and autonomy over work, the right of substitution, financial risk, and other relevant aspects. The IR35 rules primarily affect three key entities: workers, clients, and agencies or other types of suppliers. Workers, who provide services through limited companies or personal service companies (PSC), are subject to these rules. Clients, the recipients of these services, and agencies or suppliers involved in the process also fall under the purview of IR35. As expert
tax investigation specialists, Templeton Brook Witt offers clear guidance of who the IR35 applies to, helping you to stay compliant.
It's also important to note that the rules differ based on the size of the business, with small and large corporations adhering to distinct guidelines. The application of IR35 hinges on various factors, including the nature of the client (public sector, private organisation, or small business). While clients are typically responsible for determining the employment status of a worker, the rules can be complex and vary depending on the circumstances. For small and medium businesses outside the public sector, the worker's intermediary assumes the responsibility of deciding the employment status. Teaming up with
tax investigation specialists at Templeton Brook Witt, takes the stress out of determining the status of workers.
The PSC is a common structure for freelancers or contractors, allowing them to operate as limited companies. Understanding the role of PSCs is crucial in the context of IR35. Operating under a PSC provides advantages such as prestige and tax efficiency, but the rules were implemented to ensure legitimate use and prevent tax evasion. The IR35 closes loopholes that allow employers to sidestep National Insurance Contributions and contractors to reduce their tax liabilities. Breaching IR35 can result in significant penalties for both businesses and contractors. The severity of penalties depends on whether the breach was accidental or intentional. Templeton Brook Witt’s
tax investigation specialists can help you avoid these penalties and tackle any
IR35 disputes.
Navigating the complexities of IR35 rules is essential for businesses and contractors alike. Staying informed about the legislation, using tools like the IR35 calculator, and ensuring explicit written agreements can help businesses maintain compliance and avoid potential penalties. Investing time in understanding these rules will ultimately safeguard businesses and contractors from legal complications or financial risks. Additionally, it is important to have an understanding of issues that could lead to an IR35 dispute. Templeton Brook Witt’s blog
here has more insights on the red flags that can trigger HMRC IR35 investigation. If you are in need of help with determining worker statuses, IR35 investigations or disputes, or
HMRC tax investigations, get in touch with Templeton Brook Witt’s
tax advisors today.
Your Trusted Advisors
Based in the landmark St. Mary Axe, Templeton Brook Witt provide specialist tax investigations, compliance advisory and employment dispute advice to private clients and corporates.
0207 889 1000
info@templetonbrookwitt.com
30 St. Mary Axe, The Gherkin
Level 28
London
EC3A 8BF
© 2025 Templeton Brook Witt Ltd. All rights reserved.