The infamous press release "IR35" was issued on 23 September 1999 as part of the pre-budget announcements for the April 2000 budget from the Treasury. The actual legislation came into force on 6 April 2000 as part of the Finance Act 2000, Chapter 17, Section 60, Provision of services through an intermediary, schedule 12.
Also part of IR35 and introduced on 6 April 2000 were regulations relating to National Insurance Contributions (NICs). These are known as the National Insurance Regulations Statutory Instrument 727, part of The Social Security Contributions (Intermediaries) Regulations 2000.
Following the introduction of the legislation in 2000, service providers working through intermediaries could be liable for additional tax and NI payments. All contracts since April 2000 could be covered by IR35, meaning that HM Revenue and Customs can still investigate contracts dating back seven years. Contractors may be liable for back taxes.
Past contracts that would have fallen under IR35 and are deemed to do so by an inspector of HM Revenue and Customs will attract additional tax and NIC liabilities that the contractor may have to pay now, or in the future.
This is also true of "husband and wife" companies, where shared income over several years that is deemed to fall under IR35 will attract back payments of tax and NICs. The potential back tax can be significant and run into tens of thousands of pounds.
To speak to one of our tax experts call 0845 643 1580.