IR35 Investigation: Tax Liabilities

Q. If an IR35 investigation resulted in a tax liability for PAYE and NI am I correct to assume that the resultant bill for tax would represent the difference to the overpaid corporation tax that would already have been paid and likewise allowance made for the personal dividend tax paid that would otherwise have been icons subject to PAYE ? I ask because online calculators suggest the marginal benefit of being outside of iR35 is often shown as c10%. 

A. The overall net tax liability will indeed be the resultant IR35 PAYE & NIC less any overpaid corporation tax as a result of relief given to the deemed employment payment (including employers Class 1 NIC) plus any personal tax paid on dividends.
 
It is important to remember however that corporation tax relief to the deemed payment is given in the accounting period in which the payment falls. For example, if a company had a year end of 31st January & the deemed payment fell on 5th April 2016, then corporation tax relief can only be claimed in the accounts year ended 31st January 2017.

Leave a Reply

Your email address will not be published.

★ ★ ★ ★ ★

Very pleasant. Excellent price for what I needed. I will be a returning customer.

Rhino Review

Mr Paul D

Great staff. Customer focused and a team who recognise and understand their customers 100%.

Rhino Review

Vijay S

Fantastic accountants who helped me submit my last 2 years personal tax returns! I really rate this company!!!

QAccounting Review

Natalie

Fantastic service.

Rhino Review

Marco G

Been with QAccounting for several months now, very good service, very personal and the best prices I have seen.

QAccounting Review

Muhammed A

I switched over to QAccounting a few months ago and haven't looked back. I get to speak to my own client manager and accountant, the prices were the best I had seen, and I paid exactly what it said online (no extra costs). Very happy with QA.

QAccounting Review

Jeremy H