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Feel free to hire me – I’m all good with the IR35

February 18, 2020

Perhaps you have been lucky enough for IR35 to pass you by, or perhaps it is all up in your face at the moment.  I can’t seem to escape the IR35 chat on LinkedIn / my businessy Facebook groups / my curated news feeds. Ah, it’s like GDPR all over again!

In case you’re not familiar, IR35 is a bunch of rules closing a loophole where some employees act as contractors to pay less tax than payrolled employees.  So if you’re a freelancer / contractor you need to be all over this with a view to providing evidence in support your status as a self-employed professional. If a person is investigated under IR35, it is their working practices that will be examined as well as their contracts.  It is all about how you act rather than what you have down on paper.

As a freelancer I am of course concerned to ensure that I am operating legitimately with respect to IR35.

So.  I operate as a sole trader.  I am not a Limited Company and I am never placed by an agency.  This means I am exempt from IR35 and we’re all good.  IR35 only applies when there is a third party involved.

This information is not explicitly through-and-through most of the articles I have read about IR35 so it was actually not straightforward to find that out.  I style myself a freelancer and nearly everything I’ve read assumes that freelancers operate through a Limited Company.  Well I don’t.  In fact when I fell down that rabbit-hole I learned that apparently I’d be very foolish indeed to be a freelancer without a Limited Company.  Yeah, whatevs.  So that’s all very confusing.

Well the chat seems to be that as a sole trader the -point- of IR35 still stands for me as I am still required to declare the correct employment status and in order to do that all of the same questions apply. I’m still not allowed to act as an employee, and no client would be wanting me to edge my way in and start insisting on sick pay and keys to the stationary cupboard.

So in case it is useful for you to know, here are some reasons why I am genuinely self-employed:

  • I typically provide expertise that cannot be fulfilled by my clients in-house.
  • My status as ‘independent’ from my clients is intrinsic to the service I provide.
  • I am hired to undertake a specific and clearly defined task, with no expectation of further work being provided outwith the task.
  • Although I calculate my costs based on a daily rate, I am paid a fixed cost to complete the specific task.
  • I invoice according to completed milestones rather than at regular intervals.
  • I am free to work for as many clients as I like at any one time, and I typically have several on the go.
  • I have control of my working patterns. I can complete my work wherever I like and at my own convenience with no set working hours, breaks or holiday arrangements.
  • I use my own equipment and am responsible for purchase and the financial risk of my own assets – a laptop, digital recorder, office equipment, etc.
  • I do not receive any benefits (e.g. holiday pay, sick pay, pension contributions) from my clients, other than my fee.
  • I do not have any responsibilities within the corporate structure of any client (e.g. staff meetings, line management)
  • I am responsible for correcting any mistakes at my own expense.
  • I act like a business (business website, logo, email address, data protection registration)
  • I advertise myself as being available for freelance work and I regularly tender for freelance contracts.

This would all still be exactly the same if I suddenly switched to being a Limited Company.

So, feel free to hire me we’re in the clear!

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