Guide to IR35?

IR35 was introduced as part of the Finance Act 1999. The purpose of the legislation was to eliminate the avoidance of tax and NI contributions by using an intermediary (usually the contractor's own Personal Service Company) in circumstances where the contractor would otherwise be considered an employee of the client.

Prior to the introduction of the legislation, an individual could avoid being taxed as an employee by providing services through an intermediary and thereby reduce his or her personal tax liability and avoid payment of Class 1 NIC. The legislation commonly known as IR35 ensures that, if the relationship between the client and contractor would have been one of employment without the use of the intermediary, tax and NI contributions are made on the same basis as an employee would pay.