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Contractor accountancy services in Birkenhead

Setting up business as a contractor is an exciting time, especially in a town like Birkenhead – the chief town of the Wirral and just a short commute from Liverpool and Chester. It can also be laced with potential problems and surprises, however, particularly concerning taxation. A business owner may think they are setting up a tax efficient way of providing their services but, in many instances, they will be wrong. The notorious IR35 status, or intermediaries legislation, was introduced by HMRC in April 2000 and has had a major effect on contractors and the way they conduct their business affairs. Due to the minefield of deciding whether a contractor falls within or outside IR35 status, it is advisable to use reliable contractor accountancy services in Birkenhead, so that the company’s taxation status can be assessed.

The aforementioned legislation was introduced to outlaw the loophole used by some contractors to reduce their taxation liability. Contractors were abusing the system by providing their services through their own personal service company and, accordingly, were not being treated as employees. Working in this way enabled contractors to make sizeable savings in tax and national insurance contributions. If, after investigation, HMRC deems that a company’s contract is within the ambit of IR35, they will calculate the payment that ought to have been made as an employee. This means that the HMRC will calculate tax and national insurance contributions on all money which has been paid out as dividends.

Not all contractors are consciously seeking to take advantage of the IR35 loophole and some are genuinely independently. Unfortunately, these contractors face the same struggle to satisfy HMRC of their authenticity. HMRC will look at a company’s contracts, and also their working practices, to determine whether they are truly working as an independent contractor. The interpretation can change as new cases are constantly being decided.

Due to the complications, it is worth considering consulting experienced advisors capable of providing contractor accountancy services. In Birkenhead, Wainwrights Ltd is a good option to assess a company’s IR35 status.