Readers’ forum: IR35 and corporation tax

Joe is an IT consultant who works through his company Joe Ltd that billed its major client Lewis Ltd £160 000.

Let’s say that Lewis Ltd reviews its contract with Joe Ltd and determines that it is within the IR35 off-payroll rules. Lewis Ltd advises Joe that he will be caught. Joe disagrees and appeals under the client-led appeal process. Lewis Ltd then has 45 days to review the position and advise of any amendment. Lewis Ltd completes its review and confirms its view that Joe is caught by the off-payroll rules. From April 2021 Lewis Ltd duly puts Joe Ltd’s fees through its payroll deducting income tax of £32 000 and National Insurance contributions (NIC) of £7 000 under PAYE. The net payment of £121 000 is referred to as a deemed direct payment. The turnover figure for the accounts shows the net amount received...