IR35 and tax implications
IR35 was intended to stop the avoidance of tax and National Insurance contributions through the use of intermediaries - if there is no avoidance, there will be no IR35 liability. It is common practice for interim managers to operate via their own limited company. This allows them to more easily meet the IR35 rules and also provides them with a marketing entity to promote their services.
Under IR35, a company cannot legally employ a limited company. In this way associates cannot be considered as Dbi Consulting Ltd employees and Dbi Consulting Ltd is not responsible for the PAYE and NI contributions. This is the responsibility of the limited company.
Associate contracts are clear of IR35 as Dbi contract the company to provide ‘any consultant of suitable qualification and experience’ rather than stating a specific individual. If the services of one particular person are contracted, then IR35 would apply. It is also important that the contract demonstrates that consultants undertake work for other client consultancies as well as for Dbi Consulting Ltd.
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