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Finally, some new IR35 guidance for contractors!

While the chancellor might have promised that t was coming, most people were holding their breaths until now: new IR35 guidance is on its way for contractors.

It looks like Her Majesty’s Revenue & Customs has had enough of dealing with constant confused questions contractors and freelancers have been asking concerning the new scope that ‘disguised employment’ rules now have, thanks to the publication of the Finance Bill 2013. Of particular concern is how ‘office holders,’ in the parlance of the amendments, are now subject to IR35, yet no one seems to understand just what an office holder is according to the taxman.

Yes, there’s an official definition, which classifies any type of worker, whether it be a freelancer, contractor, or permanent employee that holds a ‘substantive’ and permanent position with a firm as an office holder – provided the position existed independently from the worker that fills it and that the position persists, filled by someone new once the previous holder leaves the position. Of course, this sort of looks and sounds like nothing much better than Greek to me, but what it boils down to is that you take on a contracting project where you end up filling one of these roles – for no matter how short a matter of time – you run the risk of falling under IR35.

In other words, the taxman says that a contractor that acts on behalf of a client as an office holder will have to deal with IR35 rules, and it won’t matter if the contractor is paid directly by the client or through a third party like a personal service company or an umbrella company. The new legislation also catches third parties that end up being appointed as an office holder for a client, declaring that IR35 still applies in situations such as these.

The motivation behind this move is of course the fact that there were some rather unsavoury types working public sector contracts, finding ways to engage in some tax avoidance through creative accountancy practices. This tax evasion was serious news all throughout last year, prompting the new Ir35 language; I can only hope that this will trip up those who attempt to avoid paying their fair share of taxes – especially sine the UK is more or less falling apart and could use the heightened tax rvenue

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