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.