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IR35 Awareness – An Accountant’s View

We take a look at the accountant’s view of IR35, and discuss what exactly a contractor expects from their accountant.

Last week we ran a piece titled ‘Do you Trust your IR35 Accountant?’ in which we discussed the importance of the relationship between the client and the accountant, particularly the need for service providers to have up-to-date IR35 knowledge. This week we speak with Julian Ball, Legal Director at PayStream, concerning this relationship, and getting an accountant’s view on IR35.

Are new contractors always aware of IR35?

“When a contractor calls an accountant to talk about working through a limited company, most accountants will talk about the practical aspects of setting up a company, opening a bank account and the likely take home pay. Many will avoid mentioning IR35 for fear of confusing a customer or because it is too difficult for them to explain. And if the accountant only has one thing to sell i.e. limited company services, he probably doesn’t want to lose the sale by putting doubt in the contractor’s mind.”

What is PayStream’s view on this?

“At PayStream we look at things differently. We believe that a contractor should make an informed decision when deciding to work through his own company which is why IR35 is always discussed on our first call with a contractor. If a contractor is unsure of his IR35 status or where we believe he/she is at “high risk” because of the nature of the work a referral is made to our compliance team.”

What do PayStream do about it?

“The contractor can then have a free IR35 review which will point out the strengths and weaknesses of his/her working practices and allow an informed decision to be made. If the contractor becomes a PayStream customer, these reviews are available when he/she changes assignment.”

Just how important is it that contractors understand IR35?

“We have found that contractors that understand IR35 are less likely to have a problem with HMRC should HMRC raise questions about IR35 status. This is because they are more likely to have organised their affairs to reflect their “in business” status. For example producing a business plan; taking out insurance; keeping a log of business costs such as telephone calls, heating, lighting, rent; importantly noting and maintaining the differences between employees on site and the contractor.”

How important is it for an accountant to understand IR35?

“If HMRC does come knocking there is no doubt that a contractor will get more support from the accountant who is up to speed with IR35 rather than the one who has washed its hands of the problem.”

Having an accountant is vital for UK contractors, and choosing them can be stressful and time-consuming and it is clear that using an accountant that is au fait with IR35 is massively beneficial. See here for our full list of recommended accountants.

By Troy Stevens

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