3 Major Tests That Are Applied To Know The Employment Of The Contractor’s Workers

Are you one of the people who are contractors? You should know that being a contractor, you must have the idea of what are the major tests that are done to determine the employment status of your workers. And by knowing if your workers are self – employed or not, the HMRC can identify if you as the contractor was subjected to the IR35 tax law. With this, you need to know that this IR35 tax law can greatly affect your business. This is also the reason why most contractors find ways to avoid from being subjected to the IR35 tax law like using an ir35 HMRC calculator. If you want to know what these major tests are, you can read the list below.

Here is the list of the major tests that are applied to know the employment of the contractor’s workers.

1. Control
This is one of the major tests that are commonly done by the HMRC to determine if the contactor’s workers are self – employed or not and then if it is subjected to IR35 tax law. The control means the level or degree of the contactor’s authority and control to the what, when, where, and how of the worker’s jobs. So, if you being a contractor have the downright control and authority of your workers, you can be assured that you will pass this test.

2. Substitution
Substitution is about the personal service that your worker can do for you or can he provide a person who will do the jobs for him or as a substitute. So, if your worker has the liberty to provide or get a person who will act as his substitute to do the required services and jobs, then he can be considered as a self – employed thus, you as a contractor are subjected to IR35 tax law. You have to make sure that for you to avoid the application of the IR35 tax law, your workers should have personal service.

3. Mutuality’s Obligation
You should also have the ideas on what is the mutuality’s obligation is all about. It is the idea of the obligations between the contractor and worker such as the work offers and if the worker is willing to do it. You should also know that the two tests stated above were also applied in this mutuality’s obligation test. And by passing this test, you can be assured that you can pass the entire three tests.

Now that you know the major tests that are applied to know the employment of the contractor’s workers, you now have the idea on how these tests work and then, you can be assured that you can pass these tests. And by giving these, you can avoid yourself from being subjected to IR35 tax law and aside from using the ir35 HMRC calculator. If you want to know more about this topic, you can ask a financial expert or a tax professional to help you.

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