IR35

[bobjugs12]

Does anybody know much about this aspect of law?

[crystalbee27]

" bednobs - its illegal -its against the law -the law was put in place to protect employees and make sure that companies who used people on a regular basis should employ them and give them the rights they would have as an EMPLOYEE -all sorts of rights from paid statutory holidays to the rights of maternity leave, and the right not to be `sacked on the spot``. it is very expensive and a lot of paperwork to actually employ someone so Companies were trying to get around the Employment Laws by taking on casual and SE people. maybe the terms are confusing you - if you are Self Employed you do not work for an EMPLOYER you work for a Contractor.. that contractor could be Mrs Smith down the road who wants a wall built -or Wimpy homes that waants 4o houses built.

[bednobs]

nope, still not getting it :)
the contractor in this case is the company that provides the service to the governemtn to fill in therefore the self employed people are working for a contractor aren't they?

[buildersmate]

Cutting through all the cr*p above about what constitutes SE or not (which wasn't the OP question) the answer is that it is the employer that cops it when HMRC comes knocking - not the employee.
HMRC will take the employer down a legal process that seeks to reclaim the appropriate tax and NI from the employer, based on the amount paid to the employee as being the appropriate payment after tax/NI. They therefore reverse-engineer the basic salary equivalent that would have constitutes the net payment made to the employee, and the difference is what they take the employer to court for.

[twix123]

The OP was regarding IR35, which was introduced in 1999 to stop the practice of IT contractors selling their services via their own private companies and taking dividends, which are taxed at a lower rate, instead of taking a salary and paying tax and NI. Often these contractors were employees of a Plc who left and were subsequently re-engaged as Self Employed contractors at the same company. This a large shortfall in Employers and Employees NI contributions being paid to the Inland Revenue.

Subsequent posts by the OP indicate that the question really relates to the difference between Self Employment and being Employees, which has been adequatley answered, although from the facts given above, it would seem the these people are Employees rather than Self Employed.

Do they complete the Self Employment section of a Self Assesment Tax Return?

[twix123]

^This caused a large shortfall.....

[crystalbee27]

@builders mate - all the c*rp talked about what constitutes SE or Employed is not cr*p its true and relevant to the original OP. You may cut and paste your answers from wiki but some of us have worked SE for 30years plus and know how it works in 'real life' ;-)