Following a review of the effectiveness of the IR35 rules, there is to be new guidance from HMRC including what is described as 12 business entity tests.
Points are allocated to each test and if a contractor scores less than 10 points there is a high chance of them being caught by IR35; if they score more than 20 points there is low risk.
The headings for the tests are set out below:-
- Business Premises Test
- PII Test
- Efficiency Test
- Assistance Test
- Advertising Test
- Previous PAYE Test
- Business Plan Test
- Repair at Own Expense Test
- Client Risk Test
- Billing Test
- Right of substitution test
- Actual substitution Test
For further advice regarding IR35 contact Eaves & Co on 0113 2443502
HM Revenue and Customs (HMRC) issued guidance in March 2011 confirming
that where a person works full time abroad, UK duties of fewer than 11 days per
annum will not usually be considered in determining a taxpayer’s residency
HMRC have now issued a statement confirming the treatment of those
taxpayers working abroad that have returned to the UK due to the ongoing
conflict in the Middle East.
The advice applies to those countries that HMRC have confirmed where
exceptional circumstances apply (Tunisia, Libya, Egypt, Syria, Bahrain and
The exceptional circumstances arose towards the end of the 2010/11 tax
year, therefore HMRC have confirmed that the residency status of taxpayers that returned to the UK temporarily and intending to return to work abroad will not be affected by the number of days of UK duties undertaken in this period.
The exceptional circumstances may potentially apply for a much longer
period in the 2011/12 tax year.
With this in mind, HMRC have confirmed that in line with previous
advice UK duties of less than 11 days per annum will not usually be considered
in determining a taxpayer’s residency status.
Cases whereby taxpayers have spent more than 10 days on UK duties will
be considered in light of individual circumstances.
Eaves & Co have extensive experience in providing residency
advice. Please contact Paul Davison on
0113 2443502 if you have any queries.