Q. I am employed almost full time in the NHS but would like to undertake some clinical for a small private company who do not do PAYE. I will have a contract (of sorts) from them, but they do not do PAYE and I am unsure as to how I will pay national insurance. I appreciate that I will have to complete a tax return for this work and hence plan to consult an accountant. However, I wonder where I will stand with IR35 and would like to clear this up before I start work.
A. How you pay the relevant taxes and NICS will depend on the trading vehicle you adopt, i.e., as a self-employed individual or limited company, however an accountant will be able to advise further in this respect. With regard to IR35 or status, HMRC could challenge the work undertaken on a self-employed basis if it’s is similar to the work you carry out as an employee, so you should ensure that there are very obvious differences in the work and your working practices. If the work is going to be the same or similar it could be difficult to defend. However it is important to note that if you decide to operate as a sole trader, IR35 will not apply as this only applies to limited companies or partnerships, and any liability for status will fall to the end client/agency. If you setup your own limited company, your business will be liable for employment status under the IR35 legislation. For both status and IR35 the same key tests are applicable and for further information, you may wish to take a look at our IR35 Guide.