Combining 2 trades in one company and IR35

Combining 2 trades in one company and IR35

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I have a client who is looking to incorporate his business which will almost certainly fall within IR35 (single source of income, control and direction, working arrangements etc). Even as a "sole trader" there's a strong argument to say he's currently a disguised employee of his current contractor, but, as things stand, this would be their problem rather than his in the event of any HMRC queries.

He's adamant that he wants to incorporate due to the eye-watering amounts of tax he's paying at the moment. He says that one of the guys he works with did the same thing under the advice of his accountant, by bringing in his wife's business into the company. In this case, it would be 2 very diverse income streams coming into the company but as far as I know, this doesn't affect the IR35 assessment as you would look at each in isolation.

So the question is, is there any validity in his argument?

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By gbuckell
17th Sep 2013 17:12

Smoke screen

To my thinking you are correct to say that bringing in the wife's business makes no difference to the position. At best it would be smoke screen.

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By JCresswellTax
18th Sep 2013 09:46

Agreed

IR35 works on a contract by contract basis so if HMRC wanted to open an enquiry, they would do so into the husbands contract.

Why not advise him to get a contract review? It will cost a couple of hundred quid but he might get a pass for outside IR35?  Its a difficult area and iv seen passes before for those that I thought would be caught.

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