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Replies to Queries

06 February 2002
Issue: 3843 / Categories:
IR35 avoidance device

I have a client company in the construction industry who entered into an arrangement for what would otherwise be part of its workforce to be remunerated by a specially formed composite company of which there are twenty members holding a special class of share entitling them essentially to the sums earned by their own labours.

The promoters of the scheme claim that the workers take-home pay is improved by up to 30 per cent achieved by the payment of dividends.

The essence of the scheme relies on arrangements such that the client company is the 'contractors' agency; the employees/contractors are paid by an intermediary the composite company which is associated with another company. That other company is presumably the client company for IR35 purposes formed by the promoters of the scheme and this company actually invoices my client company for the labour costs.

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