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Know What Is IR35 Rule
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Posted On :
Aug-18-2011
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Article Word Count :
415
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IR35 rule is meant to make freelance professionals pay taxes. It is a law that helps government increase revenue buy punishing the people who evade tax.
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Passed as law through Schedule 12 of the Finance Act 2000, IR35 rule regulates all those who are working as a freelance contractor In IT industry. No professional working in IT industry can overlook the rule for the reason that evading it can be extremely culpable crime and can lead to severe penalty. Nevertheless, if you are not well acquainted with IR35 rules and regulations you better pull your socks and try to know them because it is quite necessary for an aware citizen.
As all contractors who don't come under Inland Revenue's category of 'self employment' can get affected by the law, they should consider it well required for the reason that ignorance is not considered an alibi in the UK law. Nevertheless, the entire orientation of IR35 rule is to prevent freelance contractors from misusing the liberal law i.e. taking dividends in the form of salaries from clientele such as limited companies.
Income tax department always tries to pass regulatory laws that govern tax payers i.e. no one should be left undetected when it comes to tax; in nutshell it is cardinal that there is no discrimination amongst tax payers. Why government asks for fair tax can be answered straight forwardly i.e. government needs revenue to incur its own expenses. IR35 rule in the UK ensures that contractors are subjected to pay the taxes that are paid by the rest of the people in the country i.e. there is no bias towards some section of professionals or left out.
The IR35 rules have been made to make all the professionals working in the IT industry pay taxes who would otherwise be left if such a law was not at the place. Although freelancers are taxes quite low, such professionals too should be taxed for the reason that some such professionals make hell lot of money and get undetected by the Income Tax Department which in fact is loss of huge revenue. Otherwise also it is an injustice to the honest tax payers.
The determination of the employment or the profession whether it falls in IR35 is done by the Inland Revenue of the UK. There are two categories 'employed' or 'self employed' and depending upon the category the person is taxed. For instance if someone is working at office in usual 9-5 routine, he can be considered an employee, if however, some one is works for a number of clients he will be considered as self-employed under the rule.
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Article Source :
http://www.articleseen.com/Article_Know What Is IR35 Rule_74561.aspx
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Author Resource :
Helix Management is a leading name in providing tax efficient payment services like Self Employed Tax calculator, Contractor Take Home Pay and disguised remuneration etc. Find a concise overview of the IR35 rules.
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Keywords :
Contractor Take Home Pay, Contractor Tax Calculator, IR35, IR35 Rules,
Category :
Finance
:
Taxes
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