Hi Karolle,

in this instance though the firm has ten sub contractors so in no way is deemed employment.

IR35 was intended to stop people who would otherwise be deemed as employees from treating their income as a business and enjoying the tax benefits that such brought.

I won't get into the fact that the people who drafted the legislation included groups that could only benefit from the demise on the UK IT industry. Namely, the consultation committee included representative of management consultancy firms and Indian outsourcing companies but nobody representing the industry itself was allowed to attend! It was basically all part of new Labours attempt to absolutely crush the entrepeneurial spirit of the UK populace. Seems that they would rather see us as an unemployment statistic with the jobs transferred to India than bringing in a lot of money for the treasury.

Entrepeneurs were the first to be villified, then it was people who saved for their pensions who were tax dodging scum and now it's people who give to charity who are evil tax dodgers... just go figure that last one! Or in fact any of them. It's like the treasury has a gun and if making real efforts to blow it's own feet off.

All three of those are very good examples of where the Government should adhere to the old adage of "if it aint broke don't fix it".

In response to this case I would say that it is not IR35 as the risk and reward is born entirely by your clients business. There is a genuine firm infrastucture, sub contractors, their own equipment, etc.

This is a business and not a personal service company. If it had been one guy without workers or risk of making a loss then it might not be so cut and dried.

For info, here are the IR35 rules (my comments applkicable to your case are in blue) :

If you can answer yes to most of the following questions, you would probably have been an employee of your client for the contract in question and therefore within the new rules.

Do you work set hours, or a given number of hours a week or a month?
Do you have to do the work yourself rather than hire someone else to do the work for you? (Your client hires subcontractors)
Can someone tell you at any time what to do, when to work or how to do the work? (You can tell a painter what colour you want a room but that doesn't make him an employee)
Are you paid by the hour, week or month? (Your client is pressumably paid for the job)
Can you get overtime pay? (Different to negotiating for overruns)
Do you work at the premises of the person you work for, or at a place or places he or she decides? (Its a building site not an office)
Do you generally work for one client at a time, rather than having a number of contracts? (?)

If you can answer yes to most of the following questions, you would probably not have been an employee of your client and therefore outside the new rules.

Do you have the final say in how you do the work for the client? (Yes)
Can you make a loss on the contract? (Yes)
Do you have to provide the main items of equipment you need to do the job for the client, not just the small tools many employees provide for themselves? (?)
Are you free to hire other people on your own terms to do the work you have taken on? (Yes)
If you are free to hire other people on your own terms, do you pay them out of your own pocket? (Yes)
Do you have to correct unsatisfactory work in your own time and at your own expense? (Yes)
Do you have a number of clients at the same time? (?)

All in all, my view is that this is a legitimate business rather than a personal service company... Using the Governments parlance as to my mind personal service companies are also for the most part legitimate businesses with a few exceptionsthat prove the governments rule (Think certain MP's and Mayoral candidates!).

kind regards,

Shaun.