The Intermediaries legislation (commonly referred to as IR35) was originally introduced in 2000 to stop employees setting up and working through their own limited companies in order to receive their pay in a more tax efficient way.

Essentially, HMRC will ignore the existence of the limited company and consider whether the individual would have been an employee of the client, had they been engaged directly.

If the answer is yes, IR35 applies and HMRC will look to recover lost revenue, plus interest and penalties.

IR35 is extremely complicated and it is hard for taxpayers to know where they stand. HMRC’s recent campaign in the media sector is a perfect example of this where there was a complete mix of decisions, followed by a significant number of appeals and cases with multiple hearings. The Upper-tier Tax Tribunal Judge in the case of Basic Broadcasting even commented on the taxpayers impossible task of grappling with legislation that has moving goal posts and that it is even a tax for advisors and judges.