There have been a number of cases in recent years, the majority of which have been employment tribunal hearings, involving the disgruntled self-employed claiming employment rights against their customer/client and succeeding.

At one point it seemed as though HMRC’s radar was focused solely on the Construction Industry, but now their gaze has fallen hard and fast on limited company contractors (yet again). In the last month Accountax have seen a 162 % increase in the number of IR35 enquiries instigated by HMRC.

While it is fair to say that IR35 will have an impact on your own net income, quantifying exactly how much impact is not that simple, since there are several variables. You can, however, compare the overall results in general terms.

The intention of IR35 is very simply expressed: if you are working as an employee of your client then you should pay the same taxes as an employee of that client. You can’t avoid paying those taxes simply by saying you are a freelance contractor, you have to be able to prove it.

IR35, more properly known as the Intermediaries Legislation, at its very simplest is a taxation treatment intended to ensure that two workers doing the same job pay the same amount of taxes.

The recent move from the Special Commissioners to the Tax Tribunal brought about a number of changes to the processes leading up to, and including, a hearing. One such change is the right to request, or accept an offer of, an independent review (once Determinations and Decisions have been raised) before the case is to be listed for a hearing.

I was reading the various contractor-related bulletin boards over the weekend (as you do…) and I was struck yet again by the number of people in this game who don’t really understand the business they’re in. There’s a lot to understand and nobody expects you to be a combination of chartered accountant, tax barrister and employment law expert, but some idea of the basics would be good.

This is not and does not claim to be a definitive guide to IR35 and how to avoid its clutches. That is something that has defeated many experts over the last ten years. However, I hope to provide a summary of what we do know about IR35, what all the arcane acronyms really mean, and which bits are the important ones.

We know (or we should know) that Control is a key element in determining your IR35 status. To be precise, one of the key characteristics of a Master/Servant relationship, on which employment tests are based, is that the worker is under the Direction and Control of the end client.