Contractors & IR35

Contractors & IR35

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A CIS contractor that i have been dealing with as a sole trader wants to set up as a limited company to avoid paying such high tax as he is self employed.

He wants to set up a limited company, take a minimal salary and draw dividends. I was wondering what implications this would have in regards to IR35.

Can anyone provide any guidance on how we can set this up without being taken through the whole IR35 process?

Thanks,

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By Paul Soper
29th Apr 2013 17:53

Contractor?

If he is providing building services as a contractor it is most likely that he would be genuinely self employed so working through a company would not cause IR35 issues to arise.  If he was a sub-contractor of course the position could be different as being paid under CIS is no guarantee that you are self-employed and so IR35 could then be in point.

If he does engage other people to do at least 25% of the turnover it would seem from HMRC guidelines that he would be unlikely to be investigated.

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