The high volume employees that the HMRC considered as disguised had hurt the finances of the UK significantly. In here, the IRS35 rules apply to the HRMC used the term “disguised employees” in which an organization will engage to work on self-employment basis rather than on contract. It was legislated despite the multitude of criticism and data among tax experts and economist.
The purpose of the IR35 rules is just to make people pay for tax especially those who avoid taxes as a disguised employee. But how will one determine if he is a genuine contractor and is not among those mentioned above as disguised employee?
Since compliance to the law is important especially in taxation we have undergone intensive research in the taxation occurrence in the business sector in the United Kingdom and able to formulate the outlined questions below to determine and track one’s employment status and ensure that you are not among the disguised employee.
Check If You Are Not A Disguised Employee:
1. Do you have a legit contract that states precisely about the work?
2. If you are working as extension workforce in the company, are you being seen and treated as employee?
3. If you are a legit independent contractor, are you being treated differently from the ordinary employee of the company?
4. Are you just working as a substitute for the certain job?
5. Do you able to quote your rate and manage the job offered to you?
6. Are you rendering services for multiple clients?
If the answers to the questions above are all YES, then it is possible that you are a self-employed person, and not an employee in disguise. On the other hand, a disguised worker of the client does not have much freedom on the work, and certainly, the client can shift him from one job to another when it is required by circumstances. Anyone who decides to get plunged into the workforce industry in the United Kingdom as self-employed or contractual basis must know the IRs rule so that he can assure that he is operating and working in compliance with it.
The employment test on your part is truly important so that one knows that he is not caught by the IR35 rules because quite often the HMRC inspector will try to inspect the notional contract and rather dismissed the written contract between you and your client, so it is better to have a backup in your defense. The notional contract is used by the judge or inspector to evaluate if you are a hidden employee who is subjected to the IR35 rules or as self-employed or B2B services. In some cases, a person finds it challenging to determine if he falls under the IR 25 ruling and gives uncertainty to the person regarding his tax status. Should you are not sure if you are considered a disguised employee that falls under the IR35 rule, you can ask someone who is more knowledgeable in taxation before you get caught and suffered from consequences.