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IR35 changes unlikely to affect contractors, says legal expert

In light of changes due to be applied to tax legislation IR35, a legal expert has predicted that the majority of the UK’s contract workers will not be heavily affected.

The proposed changes are set to bring holders of office space such as auditors, directors and company secretaries within the boundaries of the existing legislation.

Roger Sinclair of Egos, legal specialists for contractors, said:

“From April 2013, income earned by contractors who are office holders of the client, or who would be office holders of the client, but for the fact that the individual does not have a direct relationship with the client, will fall within IR35 and be taxed accordingly. However, according to HMRC’s guidance and case law on what constitutes an office holder, it seems likely that very few contractors will be affected.”

Sinclair added that until the changes are put in place after this coming March’s budget announcements, the details on where office holder contractors stand won’t be clear.

The Treasury published details of the amendment to the Income Tax Act 2003, stating that IR35 would apply:

“If the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client or the holder of an office under the client.”

It would also apply if the contract worker is holding an office under a client, with services provided relating to that office.

Whatever the final amendment brings about, a contractor accountant will be able to ensure tax bills are legally minimised and legislation is followed.

Posted by Mark
February 5, 2013

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