IR35 – Disguised Employers – F9 Consulting

Disguised Employer

IR35 Disguised Employers

If you have been contracting for some time, IR35 will be a piece of legislation you should be familiar with.

Essentially it is anti avoidance aimed at preventing disguised employment, that is someone working through a Personal Service Company (PSC) as an employee but not paying the relevant income tax and national insurance.

With around 2m contractors in the UK, actually pursuing “disguised employees” has proved to be a near impossible task, the average time it takes to process a single IR35 case is in excess of 2 years.

Taking this into account, along with the significant reduction in HMRC staff, the consultation demanded by Chancellor George Osborne in the summer budget has been looking for easier routes to what some might deem as the taxation equivalent of low hanging fruit.

One suggestion that is gaining ground with advisors and HMRC alike is quite revolutionary. We know chasing disguised employees has not worked, so why not place the burden on the employers, or engagers as they are known.

It’s true to say that there will be far fewer engagers as opposed to “employees”, reducing the volume of entities to monitor, and it is the engager who has the ability to withhold tax if they deem an engagement to fall inside IR35.

It is common practice for banks, insurance and tech companies to contract a large proportion of staff through limited company’s, this would allow the collection of large amounts of tax, administered from just a few large corporates.

This could be a seismic shift in HMRC’s approach to IR35, we can only guess how the industry will react and what the ramification will be for intermediaries and company’s engaged to a “disguised employer”.

the consultation ran from 17th July to 30 Sept, we have yet to hear the findings.

Watch this space, you can download the discussion doc here.

Request a call-back

We love to hear from new clients, if you would like us to call you back, pop in your details, one of our qualified professionals will be in touch.

    One comment

    1. Neil says:

      Great article, thanks for the info

    Have your say, leave a comment…

    Your email address will not be published. Required fields are marked *

    City of London

    Second Floor,
    10 Trinity Square,
    London EC3N 4AJ
    Phone: 0207 100 1080

    Canary Wharf

    29th & 37th Floors
    One Canada Square,
    Canary Wharf, London E14 5AA
    Phone: 0207 099 1080


    First Floor
    81-85 High Street,
    Brentwood, Essex CM14 4RR
    Phone: 01277 223 278


    Chancery Place
    50 Brown St
    Manchester M2 2JT
    Phone: 0161 820 1080

    Opening Times

    Monday – Saturday
    8:00 AM – 6:00 PM