In this column, Jennie Brown, Tax Partner at Streets Chartered Accountants, discusses the importance of Employment Status.
Ensuring that an individual understands the significance of their Employment Status is important for many reasons, not least in understanding how they will be taxed on their earnings and any requirement to make assessments with HMRC.
This can be a complex area however; this article has been prepared to give an overview of some of the key considerations.
First, dealing with terminology, a contract of services is that of an employee-employer and a contract for services is that of a contractor-client.
Additionally, the rules known as IR35 apply when an individual is providing their services through their own Limited Company. IR35 is essentially in place to address the issue, if it were not for the Limited Company that sits between the individual and the end organisation, the relationship between them could be viewed as one of employee and employer.
A whole host of factors are considered, those key ones are listed below and are equally relevant to considering the status of a contractor who is self-employed but is not operating through a Limited Company: Supervision, direction and control over work; right of substitution;
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