Contractors group names the big three guides to IR35

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b>Big Three

The Professional Contractors named the ‘˜big three‘ status indicators as to whether you are caught by IR35 or not.

Those are:-

1. Personal service (substitution)
2. Direction and control
3. Mutuality of obligation

IR35

In other words, if you have the right to appoint a substitute to do your work while you are unavailable, if you direct and control your own work rather than being directed and controlled by the company, and if the company is not obligated to pay you if you are not there then you‘ll be outside of IR35.

If you can‘t satisfy any of these then you‘ll be caught by IR35.

If you can satisfy some but not others then we are in a grey area.

Dragonfly

This is despite the Dragonfly case in which one freelancer unsuccessfully contested a £99,000 tax bill from HM Revenue and Customs.

John Brazier, managing director of the PCG, who have just brought out a new Tax Guide, said: ‘It‘s still entirely possible to work outside IR35, despite the shock of the Dragonfly case earlier this year. What that case showed is that the traditional advice remains sound, but must be followed thoroughly and carefully.’

Larkstar

The new edition of the Guide comes as PCG awaits the outcome of the High Court appeal involving Larkstar Data Ltd.

The case was heard in November, and is unusual in that Larkstar‘s owner won the case at the General Commissioners, and HMRC appealed to the High Court.

The PCG is supporting the case; a judgment is expected in the new year.

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