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Important changes to intermediaries legislation affecting GP locums and practices (IR35)

What is IR35?

IR35 is an anti-tax avoidance measure introduced by the Government in April 2000. It is also known as the 'intermediaries legislation'.

It targets individuals who attempt to avoid paying employee income tax and national insurance contributions (NIC) by supplying their services through an intermediary (usually a 'personal service company') and paying themselves dividends.

The IR35 regime investigates the nature of the relationship between the worker and the end-user to determine whether, were it not for using a PSC, that individual would be considered as an employee or office holder (for example, a director) of the client.

Where an employment contract would have existed between the worker and the client in the absence of the intermediary, IR35 ensures that the income tax and NIC liability in respect of that worker is broadly equivalent to that of an employee. It does this by imposing PAYE and NIC obligations on the intermediary, although from April 2017 those obligations transfer to the client where they are a public sector body.

IR35 is part of a wider body of anti-tax avoidance rules which may also need to be considered where individuals are supplying their services through intermediaries or agencies.

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