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IR35 affects all contractors who do not meet HMRC’s definition of self-employment. The legislation was designed to stop contractors working as ‘disguised employees’, by taxing them at a rate similar to employment. The reason for this is that the increased risks and responsibility of contracting, and lack of employee benefits, are why contractors benefit from tax advantages. Therefore if you are deemed to be working as a contractor without accepting the increased responsibilities you will not be entitled to these tax advantages.
For more on the IR35 review carried out by the Office of Tax Simplification see our dedicated IR35 review section.