Following the news this past weekend that three prominent television presenters working for the BBC “off-payroll” have been hit with tax avoidance charges as a result of new tax legislation IR35, it is essential for contractors and freelancers to review their paycheques and tax status to ensure that they are protected.
Joanna Gosling, David Eades and Tim Willcox were found to be liable for the tax after a tribunal ruled that they had opted to work for the BBC through a personal service company (PSC). The taxman’s victory is the latest in a series of test cases going through the courts, in which HM Revenue & Customs is claiming that freelance workers have breached IR35 tax avoidance legislation that is aimed at contractors working for a single company, who are employees in all but name.
For freelancers and self-employed workers across the UK, IR35 has been met with widespread criticism, as it is thought that IR35 could reduce a freelance worker’s net income by 25%. YunoJuno found that 43% of senior personnel didn’t know how IR35 would affect their business and 42% were unaware of the fines for non-compliance, meaning that many a business and freelancer across the country is likely to run afoul of IR35.
CEO of ETZ, Nick Woodward, provides the following advice and commentary on dealing with IR35:
“When hiring freelancers many employers are unaware of the details that go into paying them. Invoices often come in a variety of forms and gig economy employees are often paid inconsistently and late. With modern technology, businesses should be able to keep on top of their freelance employee’s payments so they can be paid on time and without error. If businesses want to retain and attract the best talent, they should educate themselves around IR35 and ensure that they have robust and efficient timesheet technology. There also needs to be more education from the industry to ensure that contractors and freelancers are working in the correct manner, and do not suffer any repercussions due to a lack of knowledge.”
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