Avoid the IR35 tax disaster that you never new was simmering

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Avoid the IR35 tax disaster that you never new was simmering

tax_ir35_hmrc

A former BBC presenter is now facing a bill that could reach more than £400,000 following a dispute and lost tribunal with HM Revenue & Customs. The judgement could now set a precedent to affect many others working in a similar way.

Christa Ackroyd, who presented BBC Look North for more than a decade, was in a legal battle with HMRC who claim she owes £419,151 in unpaid tax between 2008 and 2013. Ms Ackroyd, who contends the sum stands at approximately £207,000, was employed under two fixed term contracts between the BBC and her personal service company, Christa Ackroyd Media Ltd (CAM).

HMRC declared that she was an employee of CAM and that therefore the company was liable to pay income tax and national insurance, while Ms Ackroyd had argued she was a self-employed contractor.

In its ruling for HMRC, which the tribunal acknowledged was a “value judgment”, it said: “We do not criticise Ms Ackroyd for not realising that the IR35 legislation was engaged. She took professional advice in relation to the contractual arrangements with the BBC and she was encouraged by the BBC to contract through a personal service company.”

“Until last year it was for individuals with service companies rather than those engaging them to determine their status for tax purposes. The use of personal service companies is entirely legitimate and common practice across the industry as it provides flexibility for both individuals and organisations.

An HMRC spokesperson said: “Employment status is never a matter of choice; it is always dictated by the facts and when the wrong tax is being paid we put things right.”

Whilst completion of tax returns and statutory tax obligations are important jobs, all accountants should be capable of completing them and advising you of your tax position and liabilities. However you are also entitled to arrange your affairs to pay the absolute legal minimum amount of tax.

Marden & Co do more than just this and take an active interest in maximising your tax planning opportunities. By recommending various courses of action, dependent upon your own personal situation, we aim to ensure that you pay the least amount of tax as legally possible, and we include consideration of IR35 with advice to ensure you don’t get caught out!

New clients are often surprised at how much can be done to help with their tax position. We are always willing to go that extra mile to offer advice on the areas where tax can be saved.

So why not get in touch today and avoid a potential nightmare, let Marden & Co worry about your position so you don’t have to – you can give us a call on 01737 851761 for a no-obligation chat or drop us an email on info@mardenandco.co.uk