Ltd Co IR35 Confusion

[Utrinqueparatus]

Background: Me and another director both own 50% of a Ltd Co that has been trading for 5 years. It is an IT DevOps professional services company. We have 6 employees that we have trained ourselves, an office and developed products, software and training academy content. Both directors are billable to clients from time to time.

We have recently instructed an accountant who tells us that all company income has to be paid to myself and the other director as PAYE because of IR35 and us classifying as a PSC. Surely the fact we have and train employees and develop software, have offices that are used by our employees means we aren’t a PSC but in fact a bonafide professional services company.

This doesn’t sound right to me, this would mean that the ltd co cant make any profit and therefore shouldn’t be paying for offices, training employees etc.

Can anybody advise or suggest an expert in this area that can clarify our position?

Thanks in advance!

 

[Rawlinson Pryde]

Here are the PSC definitions to start with

https://www.gov.uk/guidance/people-with-significant-control-pscs

 

[Utrinqueparatus]

Here are the PSC definitions to start with

Apologies, as usual, acronyms not the best way to get a message across.

PSC in this sense meaning Personal Service Company.

Can’t post a link for reference until i have 30 posts

 

[UK Contractor Accountant]

Think you need to change your Accountants.

suggest you join IPSE which will give you access to their legal & tax helpline including contract reviews/IR35 determinations.

https://membership.ipse.co.uk/becom...17jMg2hTCvtoZoRk8Pyn1Cbl8MLx2uQQaAo0-EALw_wcB

 

[UK Contractor Accountant]

There is also HMRC's CEST tool you can try out to see if your services are regarded as in/out of IR35. Be aware it is not foolproof though.

https://www.gov.uk/guidance/check-employment-status-for-tax

 

[NicoJ]

It does seem unlikely that IR35 is in play here, but as always it depends on the reality of each individual contract.

What reason did your accountant give for this advice?

 

[SteveHa]

Almost certainly not within IR35, but ask yourself some questions:

• Who does the work
• Do you have more than one client
• Can you send anyone from the company to conduct the work
• If you get it wrong, do you have to fix at your own expense
• Are you able to refuse work if offered
• Who decides how the work is done

These are common questions asked by the tribunals when status is disputed, and should lead you to the correct answer. Has your accountant asked these questions? If not, on what is (s)he basing his/her advice?