Patrolling the waters

Marion Hodgkiss and Michael Steed consider the challenges of giving advice relating to IR35 in the public sector

IR35 – an imperfect history

IR35 was first introduced in FA2000 as a way of making sure that contractors in one man one woman companies would self-police their exposure to income tax and NICs through their own Personal Service Companies (PSCs).

Not surprisingly, contractors almost universally deduce that they are not caught by the rules (which would require a ‘deemed payment’ subject to IT and NICs under S54, ITEPA 2003) and invoice clients as normal, receive their invoices paid gross as normal and take minimum salaries and large dividend payments as normal.