Much of the publicity surrounding IR35 has concentrated on its effect on the IT industry where a lot of contractual work is carried out. It would be wrong to assume that it only applies to people working in the IT sector, though.
The legislation has baring on any business sector where (according to the HM Revenue & Customs):
Anyone who organises their work like this could be affected by IR35. And the range of professions where people work through service companies is wide. Examples include medical staff, chief executives of large plcs, legal and accountancy staff, construction industry workers, clerical workers, press officers, night club bouncers and many others.
It’s important to remember that IR35 can apply to anyone working through an intermediary, regardless of what they do. And the intermediary is normally a limited company, commonly referred to as a service company, although it could also be a partnership.
If a worker is claiming to be self-employed but is working under conditions where they would be employed by the client were it not for the intermediary company or partnership he or she falls under IR35.
There are guidelines on the HMRC website for the worker who is in doubt as to whether an engagement is employment or self-employment. And it’s worth checking against these as they will be the yardsticks by which the HMRC will make its judgement in cases of dispute.
To give an example, this man would fall under IR35:
The HMRC's conclusions are:
Therefore, the engagement is one which would have been an employment had it been directly between Gordon and the client. The common intention for self-employment does not alter that. While it would have proved decisive in a borderline situation, a review of other factors clearly points to employment here.
IR35 applies to the engagement.