IR35 rules criticised for being too complex

Contractors are concerned that they may be being placed within IR35 tax rules regardless of their true employment status because of over-complex rules, according to recent research.

IR35 rules were introduced to make businesses responsible for assessing whether a contractor should be regarded as self-employed or whether they are actually classed as a worker.

The decision can have substantial tax ramifications for those involved in that a worker is likely to pay up to 30% more tax than a contractor. The survey of more than 900 contractors found that over 40% believed they had been subject to blanket IR35 determinations and were being wrongly treated as a worker.

IR35 rules are regarded as overly complex and ambiguous resulting in IR35 status often being misinterpreted and misapplied, resulting in difficulties for employers as well as the individuals affected.  Businesses are calling for a reform of the legislation and better HMRC guidance to assist them in determining the status of contractors and workers. 

If you are concerned that a contractor may in fact be a worker, contact us at enquiries@121hrsolutions.co.uk for guidance.

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