My wife works as a free-lance consultant in the media/marketing industry. She set up as a sole trader as she was advised against LTD route for numerous reasons, and sole trader was easy and simple to set up, and has worked well.
She's now been asked to fill in an IR35 form by one of her clients, and my first reaction is she doesn't need to as IR35 only covers entities (i.e. LTDs) not sole traders. I'm still happy in that assertion.
However in finding a few confirmatory sources, I came across these, with some interesting quotes
Does IR35 apply to sole traders? - Contract Eye
Are sole traders affected by IR35?
In what case would she need to be placed on the payroll? And what additional taxes would be due in this case? She currently pays tax and NI via self-assessment, with nothing deducted at source, as she is very much a self-employed consultant and not an employee.
She's now been asked to fill in an IR35 form by one of her clients, and my first reaction is she doesn't need to as IR35 only covers entities (i.e. LTDs) not sole traders. I'm still happy in that assertion.
However in finding a few confirmatory sources, I came across these, with some interesting quotes
Does IR35 apply to sole traders? - Contract Eye
“The specific legislation only applies to limited companies (and partnerships). However, status is also an issue for sole traders. The main difference is that the end client would foot the bill if they were deemed to be disguised employees, rather than the contractor himself.”
There are many ways in which a sole trader can be hired by a client. The client organisation will be responsible for paying the additional taxes, interest and possibly penalties should a sole trader be considered to be an employee. Whilst the sole trader does not carry any liability, they would of course suffer a deduction on their future earnings, as the likelihood is that they would have to be placed onto the payroll of the end client.
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