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IR35 rule changes – creating a two-tier system

15 June 2021 / Alastair Kendrick
Issue: 4796 / Categories: Comment & Analysis
Jumping ship

Key points

  • Contractors are seeking to work for end clients who fit the ‘small company’ definition so they can continue to trade without being impacted by the IR35 revisions.
  • The ‘small company’ must meet the requirements of the Companies Act 2006.
  • Measures are in place to avoid medium or large sized companies setting up smaller subsidiaries to engage workers to avoid the requirement to apply the IR35 rules.

The concession introduced into the IR35 changes in regard to small companies is creating a significant amount of hassle and annoyance for those engagers of contractors whose turnover exceeds these criteria. In sectors where there is a shortage of labour there is a clear desire with contractors to seek to work for end clients who fit the small company definition so they can continue to trade without being affected by the IR35 revisions.

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