IR35 is a tax legislation designed by the HMRC to combat workers from fraudulently claiming to be a contractor for tax benefits, in other sense pay less tax. The main aim of the IR35 is to target individuals who work through their own limited companies, while still performing the same work under the same conditions as normal employees. The HMRC class them as “disguised employees”. The IR35 legislation is in place to ensure that these deemed employees are taxed correctly.
If a contractor is caught by IR35, they would lose the tax benefits of working via limited companies and will have to pay a fine and tax for previous months as well. This is the main reason why contractors should work through an Umbrella Company instead.
From April 2020, the large and medium companies that hire contractors will be responsible for assessing their IR35 status. By working with us at PNG Professionals, as we are a Transparent Umbrella company you will not face this issue as: