Notes from the BCS on the new IR35 guidelines

Much will doubtless be written about the recently released guidelines on the application of employment status rules to service company workers, as it is without a doubt the most significant change in contracting since the effective abolition of sole trader status in the late seventies.

The final version was published in the Tax Bulletin on 7 February, although the PCG had managed to find the document on the Inland Revenue website earlier.

It is in many ways similar to the earlier document, with Gordon, Henry and Charlotte making their obligatory appearance, but with one major difference to last time.

A couple of paragraphs have been inserted before the guidelines, stating that any engagement of more than a month with a single client is going to fall under IR35. As every Contract I have had over the last 16 years (apart from one, very task specific, two week engagement!) falls into that category, then I, like 95 per cent of other contractors I know, will fall within IR35.

You are basically faced with three choices come April. Take all your revenue as income, bar five per cent; secure a permanent job; or take a contract abroad, as most other EU countries now have far lower effective tax rates for temporary IT workers.

I'm going for the 'abroad' option, as are the majority of the ICC committee, as far as I can tell. It should be quite humorous watching the Government spin masters jumping through hoops in the summer, explaining that the skills crisis facing British Industry is in no way due to IR35, but...?

So long, and thanks for all the fish!