Online Accountancy Service Urges Freelancers To Verify Their IR35 Compliance

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Magic Accounts, a leading online accountancy service for freelancers and contractors, has urged all those who operate through a Limited Company to ensure they remain on the right side of the law with regards to tax, as it emerges that HMRC are increasing the number of IR35 compliance checks they carry out. Bloosmbury Professional revealed that the number of IR35 status enquiries has increased exponentially in recent years, as HMRC attempts to crack down on National Insurance Contribution avoidance, and Magic Accounts is encouraging all those operating through Limited Companies to ensure they are fulfilling their tax obligations.

Laurence Collins, Managing Director of Magic Accounts, a fixed-fee accounting service which endeavours to provide packages tailored to freelancers and contractors, says, “IR35 is a notoriously tricky area for freelancers to navigate without professional help, and with the increased resources of HMRC and the impending clampdown on tax avoiders, it is more important than ever for individuals to ensure they comply with IR35 regulations. We endeavour to provide a range of suitable services that can help freelancers to remain on the right side of the law, taking the burden of IR35 off their mind and allowing them to focus on their profession, rather than their accounts.”

IR35 was implemented in order to introduce a tax for those in ‘disguised employment’. This umbrella term involved workers who received payments from a client via an intermediary, when they might have been paid directly had they been direct employees of the client. Before IR35 was introduced in the 1999 Budget, these people who owned their own companies could receive payments from clients directly to their company, and profits could then be distributed as dividends, which are exempt from National Insurance Contributions. The introduction of IR35 meant that HMRC could examine the accounts of freelancers and contractors to ensure that they were complying with the legislation and paying the correct tax on the income they are receiving.

The burden of navigating IR35 often takes its toll on freelancers and contractors, who must spend much of their time sourcing new work and carrying out services for clients, rather than establishing their tax liabilities. More and more people are turning to online accountancy services such as Magic Accounts in order to ensure that they are on the right side of the law when it comes to IR35 and NIC. Magic Accounts are also currently in the process of creating an accountancy package that is tailored specifically to freelancers and contractors, aiming to offer extra services that are only relevant for those who qualify as such. The use of a registered office address and one inclusive contract review per year will be included in the package, as well as the conventional accountancy service which covers tax issues, accounts, bookkeeping and regular reports on financial status.