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What is IR35?

What is referred to as IR35 has changed significantly since it was first announced in 1999, particularly since 2017. It is therefore useful to look back to understand the term, where it came from, and what it means for current taxpayers and advisers.

In the March 1999 Budget, anti-avoidance measures to target the avoidance of tax and NIC by individuals providing their services through an intermediary such as a personal service company or partnership were announced. The proposals were issued in Revenue Press Release IR35 and this led to the rules becoming widely known as ‘IR35’.

The first legislation in this area broadly addressed the issue of those providing their services through an intermediary that resulted in those individuals extracting profit from the intermediary as a dividend and, as such, paying lower tax and no employer or employee NIC as compared with an employee working directly for their client. As the rules have developed, they now cover a wider variety of arrangements and the responsibilities and administration around these rules are far more complex. A