Contractors Working Practices
One of the big fears that HMRC have is that if they tell contractors too much about how they test for IR35 then contractors will simply change their contracts and their working practices.
We‘ve seen this before first after iR35 came out and then after each test of IR35 in the courts.
Now IT Contractors will be busy scanning the tests to see how they can be outside of IR35.
For instance they get 2 points if they have spent £1,200 in the last year on advertising their services.
Of course, few may have done this in the past year. However, you may find in a year‘s time that more would have done it.
After all, if someone is earning 100 grand a year that would be merely 1.2% out of that. That’s tax deductable too.
Others may decide to rent space at their Accountant‘s office or band together with some other contractors to rent some space. That should give them a hefty 10 points.
You need 11 points or more to be medium risk and 21 points or more to be low risk.
It will be interesting to see what IT Contractors will do when the new test comes out.
It will be interesting to see what their Accountants advise them to do. Will they advise them to change their working practices with these new IR35 rules?