Potential IR35 exposure

24 April 2002

Issue: 3854 / Categories: Forum & Feedback

A company with a year-end of 31 July 2001 has income which could be deemed to fall under IR35. If a salary is not paid under pay-as-you-earn by 5 April 2002, the company will have profits on which it will pay corporation tax.

If the accounts are queried in June 2003 i.e. beyond nine months after the 31 July 2002 year-end and the Inspector insists that the income is subject to IR35 and salary therefore has to be paid how would the company recover the corporation tax it has already paid?

Also what are the chances of an attack under section 134 Taxes Act 1988 (workers supplied by agencies)? Advice on how this could be avoided would be welcome.

(Query T15 994) - Scottie.

It has long been the concern of my firm that there are many dangerous similarities between a traditional agency and a personal service business that does nothing more than supply its director. In a nutshell section 134 Taxes Act 1988 applies where business A supplies worker B to client C. Where the...

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