Accountants who advse on tax issues and on IR35 are financial experts who help contractors get through complex legislation related to PAYE, disguised employees, corporation tax returns, and the advantages and disadvantages of umbrella companies.
Accountancy is a very big field with many different technical areas and specialities. If you are a contractor then you would naturally be looking for the best qualified IR35 accountants to deal with your employment financial issues. If this is the case then there are two aspects to this issue:-
First of all what is a IR35?
Well the IR35 is operated by HM Revenue & Customs it came into being in April 2000 and applies to all of those is deemed as ‘disguised employees’. Basically this means that the IR35legislations was introduced to close financial loopholes involving contractors being employed through intermediaries. It aimed to do this by applying to those contractors the government thought were avoiding paying the full tax and National Insurance contributions they owed by hiding behind limited companies and corporate structures.
Before the legislation came in to being some contractors would register a limited company with themselves or associates as directors and then have their clients pay their salary to this limited company. After this some contractors would distribute their wages to themselves in the form of dividends and company profits. The benefit to them being that they in the end paid less tax than if they were paid directly for any work they did.
A important point to remember is that any one who fails to properly account for their PAYE paperwork and contributions can receive heavy penalties from HMRC. So it is very important for all concerned to keep hold of any receipts they obtain.
You can get through this complex legislation by having professional IR35 accountants looking after your tax returns. With a chartered accountant not only will you have peace of mind knowing a qualified professional is looking after your financial affairs but it could also save you time and also maybe money when dealing with IR35.
Secondly what do IR35 accountants actually do?
A tax consultant should advise you on where you currently stand with your income as regards the IR35. Their job is also to inform you if you are likely to be caught out by any tax avoidance IR35 rules and clauses.
IR35 rules and paperwork are quiet complex, and if you have no experience of dealing with them you may make a mistake. Hence having a accountants firm that has IR35 accountants and experts do the work for you can save you a lot of time and hassle. They should also help you with your book keeping, your PAYE work, filling in Corporation Tax Returns etc.
You will receive advice on your expenses like travelling costs and what is allowable under the IR35 regulations and what is not. Your accountant will help you with your tax planning and tell you if your contract is compliant, and if not then what is the solution to your statutory obligations.
They will conduct a status check to the nature of your self employed contract with any other party. For instance does your basis of payment, intention or employee benefits bring you under the IR35 legislation?
Firms will also Give guidance to you on whether it may be financially beneficial to use the services of an umbrella company. Although you should only consider this option if you do not want to run your own limited company. This is a solution you should consider if you wan to be free of IR35 as all you need to do is send your paperwork like time sheets and other incurred costs and expenses to the contractor umbrella companies who will then invoice your client and collect payment from then and then pass that onto to your bank account.