Does IR35 apply to freelancers?
As a freelancer, you’ve probably heard about the IR35 reforms. Some freelancer platforms have been spotted using the new legislation…
The new Agency Workers Regulations (AWR) will come into force later this year and for those keen to be seen as outside the scope of the regulations focus will return to IR35 tests.
In the draft guidance the definition of an agency worker excludes those who are in business on their own account, but simply owning a Limited Company and putting your earnings through it will not be enough to put you beyond the scope of the regulations. Any dispute would require the worker to prove that their circumstances, arrangements and company set up genuinely support their self employed status.
A number of factors can be considered in this regard but it is likely that you will need to demonstrate a number of them to succeed in convincing HMRC. Contractors who take fiscal responsibility for any negligence in their advice and purchase appropriate business insurance will be seen as different to those choosing to rely on indemnity from the end client in the same way as an employee would.
Other factors which could be considered are the purchase of your own business equipment, computer hardware and software together with appropriate licences, personal protective clothing for site visits etc. In addition supporting your own professional development through training, or perhaps subscriptions for membership to a professional body in your chosen field.
All of these things are generally provided for employees but if you rely on them it could support the view that your status is only really in place for job flexibility or tax reasons and it would be likely to lead to additional scrutiny from HMRC.
