Revenue amends FAQs on client

The Inland Revenue has clarified that clients will not be directly affected by IR35 after one large accountancy firm was claiming they could be 'exposed' to tax bills as part of its marketing material.

UKTECH raised the issue with the Inland Revenue after Matthew Brown, managing director of the giant accounting group, released a press notice in November 2002 promoting an insurance product and claiming that "End-clients and recruitment agencies can also benefit as they too could be exposed to unexpected tax bills during an employment status enquiry. The Inland Revenue will not be choosy about how the liability for national insurance and PAYE tax is paid, and the burden could fall on the end-user and therefore the agency if the contractor is uninsured."

UKTECH queried this with the Inland Revenue, who promised to examine the situation and, as a result, informed UKTECH that the FAQs on the Inland Revenue website have been amended.

The beginning of question 2 in the General IR35 section now reads:

Who is affected by the intermediaries legislation?

Anyone supplying their services through an intermediary such as a service company or partnership will need to think about the legislation.

But 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.

The client or end-user of the worker's services is not directly affected by the intermediaries legislation. (our highlights).