Who is affected by the intermediaries legislation?
Anyone supplying their services through an intermediary which does not meet
the definition of a Managed Service Company will need to consider the legislation.
Only those contracts which would have been contracts of employment with the client if the worker had worked directly to them instead of through an intermediary are affected by IR35
The client or end-user of the worker's services is not directly affected by the intermediaries legislation.
The most usual sorts of intermediary are Personal Service Companies or
partnerships which are normally under the control of the worker. The worker
can then take the money out of the PSC in the form of dividends instead
of salary. Dividends are not liable to NICs so the worker will pay less
in NICs than either a conventional employee or a self-employed person.
If there is more than one intermediary between the client and the worker,
any intermediary which makes payments direct to the worker may be affected.
However, the intermediary with the direct link with the worker will normally
be the intermediary responsible for complying with the IR35 legislation.
Individuals not in business and contracting with an intermediary on a personal
basis (e.g., a householder engaging a plumber to fix the kitchen sink) will
be specifically excluded from these new rules.
Please see Press Release
of 23 September 99 for further details.
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