subject: The Many Deciding Factors Of IR35 Eligibility [print this page] The Many Deciding Factors Of IR35 Eligibility
A contractor who does not work for a company, but for themselves, must be very careful when it comes to obeying tax laws. The laws can be complicated, such as IR35, which exists to prevent independent contractors from avoiding fair taxes when they function just like workers who are employed by traditional companies. Determining the status of a worker, as far as their employment, depends on a few key indicators.
The reason these indicators are in place is to tell the difference between traditional employees and independent labourers who work under very different circumstances. If their employment status is called into question, workers may be asked to prove that they truly are independent and working as such. The best way to avoid this situation completely is to know the fine points of the law and follow them to the letter.
One of the most fundamental aspects of the law is the circumstances under which a contract allows for a replacement to be sent in place of the original worker. An independent worker will need to find their own replacement and be responsible for paying them for their services. However, if sending someone in place of the worker is an option, they may be considered a normal employee and not one that is strictly independent.
People who maintain a claim that they are independent must be able to justify it by showing how their conditions are different from real employees. One indicator is that they have a work schedule that changes depending on the flow of available jobs or that they are not supervised by anyone else while they are working. Another important indicator is that they have the freedom to choose their jobs and the manner in which they would like to complete those jobs.
Another thing that will be closely examined when status is questioned is the amount of financial responsibility that falls to the individual worker. Workers who are not considered employees must pay for anything that a job requires, such as supplies or equipment. They also typically quote a price in advance and are unable to change that quote if the job takes longer than expected, therefore losing money on that particular job.
An essential thing to keep in mind when maintaining independent status is that becoming too much a part of a client's business is to be avoided. This means that the worker should never attend a meeting that does not concern them directly and should not allow a supervisor from the company to manage them. They should also make sure that they do not make use of designated employee facilities, including dining halls and gyms.
Someone who hopes to maintain status as an independent worker needs to be assured that they understand the details of IR35. Their professional behaviour cannot, in any way, indicate that they work similarly to a traditional employee who works for a larger company. It can be difficult to determine employment status and the safest way to stay compliant is to consult with a professional in the field of employment status.
